Pakistan gets closer to IMF bailout as Saudi Arabia approves additional $2 billion funding


Pakistan has moved a step closer to the much-needed IMF bailout after Saudi Arabia approved funding of an additional USD 2 billion in deposits. As per the conditions imposed by the International Monetary Fund, the cash-strapped nation must secure $3 billion in funding from other countries before its $6.5 billion bailout package is revived.

The IMF agreement signed in 2019 will expire on June 30 this year. As per reports, the set guidelines cannot be extended beyond this deadline. 

Pakistan, currently in the throes of a major economic crisis, is grappling with high external debt, a weak local currency and dwindling foreign exchange reserves, enough to shore up for barely one month’s imports. The development also comes mere weeks after Pakistan received a rollover loan of $2 billion from its “all-weather” ally China.

ALSO READ: World Bank revises Pakistan’s GDP forecast to 0.4% for FY23-24 on rising rates

 According to reports, the IMF remains firm on its demand for Pakistan to collect 850 billion in terms of the petroleum development levy. It has also called for an additional inrease in interest rate as per inflation and opposes g the annual subsidy of 900 billion.

The funding is critical for Pakistan to unlock other external financing avenues and avert a default on its obligations. Currently, its diminished central bank reserves cover approximately four weeks of imports.

“Now we are being told that the commitments from friendly countries be fulfilled and God willing we will,” Prime Minister Shehbaz Sharif told parliament last week.

The IMF also noted last month that Pakistan had made “substantial progress” toward meeting policy commitments needed to unlock the crucial loans. 

(With inputs from agencies)


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