Pakistan receives assurances of $12 billion from friendly nations: FinMin Aurangzeb

• The rollover will be granted on deposits for 3 to 5 years, says finmin.
• The countries will renew the rollover every year to support Pakistan, he adds.
• IMF briefed on growth, says Muhammad Aurangzeb.
  

After Islamabad received a loan extension from friendly nations, Finance Minister Muhammad Aurangzeb said the International Monetary Fund (IMF) will give its final nod to a $7 billion loan program for Pakistan.

In this regard, Pakistan has asked its three largest bilateral partners – the Kingdom of Saudi Arabia, China and the United Arab Emirates – to grant a rollover of $12 billion in deposits over three to five years.

The three nations therefore confirmed the renewal for three years with the renewal taking place every year – in their bid to prop up Islamabad to secure approval from the Washington-based lender.

The IMF has also been informed of the critical development.

The international lending institution’s loan program will extend over a period of 37 months under the Extended Fund Facility (EFF), the minister said, adding that a meeting of its executive board is expected in late August or early September.

“There are assurances that the IMF Executive Board may consider approving the $7 billion EFF package by the end of August 2024 or at the very latest a few days later in early September,” Aurangzeb said, speaking to reporters after a meeting of the Standing Committee Finance of the Senate.

Last month, Pakistan and the IMF reached an agreement on a $7 billion, 37-month loan deal with tough measures such as an increase in the farm income tax.

The staff-level agreement capped negotiations that began in May after Islamabad completed a short-term $3 billion program that helped stabilize the economy, avert a public debt default and set challenging revenue targets in its budget to win IMF approval .

However, the IMF board’s approval, according to the finance minister, was linked to the debt profile of $12 billion from friendly countries, including $5 billion from Saudi Arabia, $4 billion from China and $3 billion from the UAE for period of three to five years.

“Pakistan has also sought debt relief from China for power plants,” Aurangzeb said.

Talking to me The news on the development, the minister said the IMF has also assessed an external financing gap of $3 billion to $5 billion.

On the other hand, during a Senate committee meeting, the minister said that the government has appointed a consultant to launch the Panda bond and the transaction will take place within this year.

He said the government is considering appointing a Chinese consultant to underwrite IPP debt owed by Chinese companies and banks. They expected positive developments on the establishment of a joint working group in the coming days.

“Pakistan wants to extend the repayment tenure of Chinese IPPs for three to five years amounting to $9 billion,” the minister said.

Aurangzeb added that international commercial banks were interested in Pakistan but wanted to achieve favorable rates. They are awaiting IMF approval for the bailout package and an upgrade from credit rating agencies, he said.