ISLAMABAD: Chief of Army Staff General Qamar Javed Bajwa has reached out to Washington to request help in securing early loan disbursement from the International Monetary Fund, to help stabilize the dwindling economy of Pakistan.
According to security sources, the army chief spoke on phone with US Deputy Secretary of State Wendy Sherman earlier this week. They said the army chief made an appeal for the White House and Treasury Department to push the IMF to immediately supply nearly $1.2 billion that the country is due to receive under a resumed loan program.
The IMF already granted Pakistan “staff-level approval” for the loan in question on July 13. But the transaction - part of the IMF’s $6 billion Extended Fund Facility for Pakistan - will only be processed after the multilateral lender’s executive board accords its final approval.
The IMF is going into recess for the next three weeks and its board will not convene until late August. No firm date has been set for announcing the loan approval for Pakistan, according to an IMF official who also spoke on condition of anonymity.
For Islamabad, time is of the essence as the rupee has been plummeting against the dollar, and the country has less than $9 billion in foreign reserves left, covering under two months of import bills.
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The IMF official said there was a major difference between staff-level approval and board approval.”Our stakeholders, the countries that take the vote as to whether they are supporting this or not, make the final decision. This is a difference. So the legally binding step is a board approval, not the staff level agreement.”
The US is the largest shareholder in the fund, founded in 1945.
The army chief’s appeal comes in the wake of separate meetings between senior civilian Pakistani and American officials in July, none of which managed to negotiate an early disbursement of funds.
“Several senior Pakistani officials have met with US and other key stakeholder nations in the IMF and World Bank in the past week to register concerns about the timing of IMF Executive Board decisions, pressing to expedite review of Pakistan’s progress on prior actions,” said an official familiar with the proceedings.
According to the sources, the lack of progress in those meetings spurred the army chief to get Washington’s attention when other emissaries could not deliver.
Since 1958, Pakistan has embarked on 22 separate IMF programmes, but completed just one. However, while officials familiar with the exchange admitted that the currency and foreign reserves situations were worrisome, they also reported progress on the IMF finance facility.
“If the government can get through this tough month, there are good opportunities to stabilize the economy, but August will not be easy,” the sources said.
Meanwhile, State Bank’s Acting Governor Murtaza Syed, in a media interaction, said the fear of Pakistan’s default was overblown, as the financing needs for the next 12 months would be met.
He admitted that Pakistan would rather get the IMF funding sooner rather than later, but also detailed that Islamabad was negotiating with Saudi Arabia and China - two countries that the army chief visited recently - to score supplemental financing.