- Ishaq Dar thanked “true brother” Saudi Arabia.
- Pakistan also wants from other friendly countries.
- The board meeting of the IMF will be held on July 12 to approve the loan.
Finance Minister Ishaq Dar said on Tuesday that Saudi Arabia has added 2 new loans to the State Bank of Pakistan (SBP), days after Islamabad reached a staff-level agreement on a $3 billion stand-by arrangement with the International Monetary Fund (IMF). deposited billions of dollars.
“SBP has received deposits of $2 billion from the Kingdom of Saudi Arabia,” Dar said during a press conference. This flow has added to the forex reserves held by the central bank and will accordingly reflect in the forex reserves for the week, he added. Expires on 14th July.
The inflow came after Islamabad signed a short-term IMF deal on 30 June under a standby arrangement that would disburse $3 billion over a period of nine months, subject to approval by the IMF’s board, which will meet on 12 July. doing.
Multilateral and bilateral funds were a major stumbling block in the way of Pakistan’s deal with the IMF – which stalled for more than nine months and ended.
The SBA now provides relief to the nation to avoid a sovereign default, and helps the government streamline fiscal policies.
With skyrocketing inflation and foreign exchange reserves barely enough for a month of controlled imports, analysts say Pakistan’s economic woes could turn into debt default in the absence of an IMF bailout.
Dar – on behalf of Prime Minister Shehbaz Sharif – thanked army chief General Asim Munir for his role in helping the government, while also praising the Saudi rulers for being “true brothers”.
“In the days to come, I believe there will be more positive developments on the economic front […] The Finance Minister said, we have reached stability.
Following the IMF deal, credit rating agency Fitch on Monday – after nearly a year – upgraded Pakistan’s long-term foreign currency issuer default rating from CCC to CCC.
Fitch said in a statement that the upgrade reflected the country’s improved external liquidity and funding conditions following the SLA with the IMF, but warned that the fiscal deficit still remained wide.
With the IMF agreement, Pakistan can now unlock other external financing.
In the plan sent to the lender, sources in the finance division said Pakistan arranged bilateral funding of $3.5 billion from China, $2 billion from Saudi Arabia and $1 from the United Arab Emirates.
On the multilateral side, Pakistan aims to secure $500 million from the Asian Development Bank, $500 million from the World Bank and $3 billion from the IMF.
Fitch said local authorities expect $25 billion in gross new external financing in fiscal 2014, while $15 billion in public debt maturities, including $1 billion in bonds and $3.6 billion to multilateral creditors.
The South Asian nation has also seen severe political uncertainty since former Prime Minister Imran Khan was ousted through a no-confidence motion in April last year.
To ensure that the program’s measures are implemented before the October elections, the lender’s team met with all mainstream political parties to garner support and consensus for the SBA.
Khan’s Pakistan Tehreek-e-Insaf said it has given its support for the accord.