Pakistan asks Saudi Arabia for reassurance in order to get further deposits from the IMF and World Bank
Islamabad: In order to sign a Staff-Level Agreement (SLA) with the International Monetary Fund (IMF) within the next week, Pakistan is requesting confirmation from Saudi Arabia that it has secured additional deposits of $2 billion and a $950 million loan program from the World Bank and Asian Infrastructure Investment Bank (AIIB).
"We are optimistic," a government official working with the IMF answered when questioned about the development.
Saudi Arabia's approval of the deposits is essential for finalizing the IMF agreement because Pakistan is having trouble negotiating with the IMF due to tensions between China and the US and because the IMF is hesitant to set a deadline for completion of the agreement while the country is experiencing economic chaos, according to Geo News.
Only if Pakistan receives the IMF bailout has the Resilient Institute for Sustainable Economy (RISE-II) of the World Bank promised AIIB loans of $950 million.
Two commercial loans totaling $1.2 billion had previously been refinanced by China in two installments of $700 million and $500 million. Chinese commercial banks will now refinance two further installments of $500 million and $300 million in the next days.
While Beijing refinanced its commercial debts prior to the signing of the deal with the lender, Geo News stated that China had stepped up to save Pakistan at a very trying moment.
The Chinese allies have been a tremendous assistance, and Islamabad anticipates that they will also roll over the deposits in the next weeks, according to government sources.
After receiving two installments of commercial loans from Chinese banks, Pakistan is aiming to increase its foreign currency reserves, which at the time stood at around $4 billion, to $10 billion by the end of June 2023, according to Geo News.
In order to complete the upcoming ninth review and release the crucial $1 billion tranches under the Extended Fund Facility (EFF) inked in 2019 by the Imran Khan administration, Pakistan has carried out all preparatory procedures to ensure the resurrection of the IMF programme.
The government implemented a number of measures in accordance with the IMF's recommendations, including the release of a mini-budget to raise the GST rate from 17% to 18%, increase the price of electricity by over Rs 7 per unit, impose an additional power surcharge of Rs 3.82 per unit, raise the price of gas, permit significant exchange rate fluctuation, raise the petroleum development levy, and raise the policy rate by 0.5%.