Pakistan requests funding from Saudi Arabia in order to sign an IMF agreement
Cash-strapped According to reports in the media on Monday, Pakistan is looking for Saudi Arabia's approval to get further deposits of $2 billion and a $950 million loan from the World Bank and the AIIB in order to sign a Staff-Level Agreement (SLA) with the IMF. Pakistan is anxiously awaiting the IMF's $1.1 billion loan tranche, which the international lender is withholding until the country's leadership takes significant choices and puts them into action.
When questioned about the likelihood of receiving assurance on deposits from Saudi Arabia and a loan from the World Bank, a senior government official who deals with the IMF said, "We are optimistic," according to The News International daily. Only if Pakistan receives the IMF bailout will the associated $950 million loans from the World Bank's Resilient Institution for Sustainable Economy (RISE-II) and Asian Infrastructure Investment Bank (AIIB) be granted, according to Geo News.
Another senior official said that the cash-strapped nation anticipates reaching the crucial deal with the international lender over the next few days, adding that the Fund was hesitant to provide a specific date for the signing of the agreement.
"Because to the growing enmity between China and the United States, Pakistan is having trouble securing the staff-level agreement in its negotiations with the IMF.
In order to further Islamabad's greater interests, the economics and diplomacy must be delicately balanced (SLA) "stated the study. After Beijing donated $700 to the insolvent nation in February, Islamabad would get $1.3 billion from China, its all-weather ally, to bolster its rapidly depleted foreign exchange reserves, Finance Minister Ishaq Dar said last week.
Pakistan is implementing a number of actions at the request of the Fund in order to release a $1.1 billion tranche under the $7 billion loan facility, including releasing a mini-budget that calls for boosting the GST rate from 17 to 18 percent in order to raise an extra Rs170 billion in tax revenues.
According to the report, the government has also increased the price of gas, allowed significant exchange rate fluctuations, increased the petroleum development levy, increased the power tariff by more than Rs 7 per unit, imposed a second power surcharge of Rs 3.82 per unit, increased the power tariff by over Rs 7, increased the policy rate by 300 basis points, raising it from 17% to 20%.
After 10 days of intense discussions with an IMF mission in Islamabad from January 31 to February 9, which failed to result in an agreement on the $1.1 billion tranche of funds from the international lender, Pakistan and the IMF have been in virtual talks.