Left with less than two months’ worth of foreign reserves to cover exports, Pakistan is likely to get $4 billion from “friendly nations” to bridge the gap in foreign reserves, highlighted by the International Monetary Fund (IMF), Pakistan’s finance minister Miftah Ismail told the Dawn.
“We think that we will get $1.2 bn in deferred oil payment from a friendly country. We think that a foreign country will invest between $1.5 bn to $2 bn in stocks on a G2G (government-to-government) basis, and another friendly country will perhaps give us gas on deferred payment and yet another friendly country will make some deposits,” he said without naming the friendly nations, according to news agency PTI.
The development comes two days after IMF said, subject to its board’s approval, it would provide the cash-strapped nation with $4 billion over the next year, beginning with an initial $1.2 billion tranche.
Pakistan on Wednesday reached a staff-level agreement with IMF for the revival of a $6-billion loan facility, paving the way for an immediate release of $1.18 billion loan tranche.
“Subject to Board approval, about $1,177 million (SDR 894 million) will become available, bringing total disbursements under the program to about $4.2 billion,” said IMF in a statement.
Additionally, in order to support program implementation and meet the higher financing needs in FY23, as well as catalyze additional financing, the IMF Board will consider an extension of the EFF until end-June 2023 and an augmentation of access by SDR 720 million that will bring the total access under the EFF to about US$7 billion.
“Pakistan is at a challenging economic juncture. A difficult external environment combined with pro-cyclical domestic policies fuelled domestic demand to unsustainable levels. The resultant economic overheating led to large fiscal and external deficits in FY22, contributed to rising inflation, and eroded reserve buffers.
