Islamabad [Pakistan], March 17 : Pakistan is now turning to the Gulf states that had promised to cover the country's fiscal deficit as the International Monetary Fund (IMF) requires confirmation from them before the lender grants approval for its USD 6.5 billion bailout program, reported Geo News.
According to a report published in The News as cited by Geo News, the IMF's condition that Pakistan bridges the gap of USD 6 billion is merely an effort to maintain its reputation. Pakistan might slide into default if the plan doesn't materialise.
All eyes are now on the UAE, Qatar, and the Kingdom of Saudi Arabia (KSA) to save Pakistan's struggling economy.
Pakistan has no choice but to wait and pray for confirmation from its Gulf allies, according to an official who spoke to the publication on the condition of anonymity.
According to the Geo News report, the global lender was compelled to make this demand during negotiations partly because Executive Board members from these nations had already committed to giving Islamabad financial support in various forms prior to the acceptance of the seventh and eighth reviews. These included further investments and deposits.
Nonetheless, despite the fact that the current fiscal year has been going on for a while, they have yet to fulfil their promises.
According to sources cited by The News, as mentioned in Geo News, on Thursday, "in such a situation, the IMF has thrown the ball in Pakistan's court to secure 100 per cent commitment from bilateral partners before advancing towards the signature of Staff Level Agreement (SLA)".
The IMF has warned Islamabad that failing to secure Pakistan's commitment from its bilateral partners after the staff-level agreement is finalised could push the nation into a default situation and jeopardise its credibility.
According to the report, the Fund is trying to determine why Pakistan's bilateral partners are unwilling to keep their previous promises. The sources cited in the report say that Islamabad can only benefit from the support of Saudi Arabia, the UAE, and Qatar in this situation if it wants to reach a staff-level accord.
By keeping its promises to refinance its commercial debts and roll over its SAFE deposits, only China had stepped forward to save Islamabad.
Pakistan has asked for the USD 2 billion in SAFE deposits that would mature next week to be carried over.
Ishaq Dar, the finance minister, revealed on Thursday that all paperwork needed to issue a USD 500 million commercial loan from the Industrial and Commercial Bank of China (ICBC) had been completed.
Ishaq Dar tweeted, "Out of Chinese ICBC's approved rollover facility of USD 1.3 billion (which was earlier repaid by Pakistan in recent months), documentation for second disbursement of USD 500 million has been completed by the Finance Ministry for release of funds to the State Bank of Pakistan."
Commercial loans of USD 700 million and USD 500 million, respectively, had previously been refinanced by Chinese commercial banks such as China Development Bank (CDB) and ICBC. Now, a further USD 500 million instalment will be refinanced either on Friday (today) or the next week. There will be a total of USD 1.7 billion in refinanced commercial loans after receiving USD 500 million from the ICBC soon.
A few months ago, Pakistan repaid a total of USD 2 billion in commercial loans, and China promised that its commercial banks would refinance the debts.
The sources, mentioned in the report, stated that it is now anticipated that the last payment on the USD 300 million commercial loan from the ICBC will be refinanced in the upcoming weeks, Geo News reported.
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