IMF wants more 'necessary funding assurances' for successful completion of Pakistan's 9th review

The International Monetary Fund (IMF) said it is looking forward to obtaining the necessary financing assurances as soon as possible to pave the way for the successful completion of the 9th Extended Fund Facility (EFF) review, a statement that comes after Pakistan secured $3 billion in fresh inflow from Saudi Arabia and the UAE.

"We welcome the recent announcement of important financial support to Pakistan from key bilateral partners," Nathan Porter, IMF Mission Chief to Pakistan, was quoted as saying in a statement to Business Recorder.

"During the meetings between the Pakistani delegation and IMF staff and management, there was agreement on the need to maintain strong policies and secure sufficient financing to support the authorities’ implementation efforts.

"The IMF is supporting these efforts and looks forward to obtaining the necessary financing assurances as soon as possible to pave the way for the successful completion of the 9th EFF review."

Porter's statement did not give details on the additional financing amount, but implied that the staff-level agreement could still be a few steps away for Pakistan as the country is required to arrange fresh foreign exchange inflow.

Before the new bilateral support, reports suggested that at least $5 billion of inflow was required to be arranged -- even after the narrower current account deficit.

China's rollover of $2 billion, and refinancing of another $2 billion -- which included $1.3 billion from the Industrial and Commercial Bank of China (ICBC) and $700 million from China Development Bank -- is not categorised as a new inflow.

On Friday, Pakistan had announced financial support from the UAE, days after Minister of State for Finance Aisha Ghaus Pasha also said Saudi Arabia had assured the IMF it will provide a $2 billion loan to the South Asian country.

Finance Minister Ishaq Dar said the UAE had promised a billion dollars to prop up Pakistan’s forex reserves — which at their current level of $4.04 billion can barely pay for four weeks of imports.

“UAE authorities have confirmed to IMF for their bilateral support of US$ one billion to Pakistan,” Dar tweeted.

He added that the country’s central bank was preparing the documentation to receive the deposit.

Pakistan was required to give an assurance that its balance of payments deficit is fully financed for the remaining period of the IMF programme that has been stalled since November last year.

Pakistan’s economy has crumbled alongside a simmering political crisis, with the rupee plummeting and inflation at decades-high levels, while devastating floods and a major shortage of energy have piled on further pressures.

At the same time, a staff-level agreement with the IMF has remained elusive even after domestic taxation measures and a free-floating exchange rate.