June 6, 2023
Finance Pakistan

Pakistan receives commitment from Saudi Arabia for $2 billion loan

On Thursday, the government of Pakistan announced that Saudi Arabia has conveyed its commitment to the International Monetary Fund (IMF) for providing bilateral financial support to Pakistan. The government is hopeful that this assurance from Saudi Arabia, along with a similar commitment from the United Arab Emirates or any other source, will help in finalizing the much-delayed staff-level agreement (SLA) with the Fund.

The completion of the SLA is crucial for unlocking multilateral disbursements and addressing the external financing gap that has been plaguing Pakistan’s economy.

Dr. Aisha Ghaus Pasha, Minister of State for Finance & Revenue, responded to questions from journalists regarding the SLA’s delay, stating that the IMF had indicated that Saudi Arabia had confirmed its support for Pakistan. This support would aid in bridging the external financing gap that has been causing hurdles in completing the 9th review of the $7bn Extended Fund Facility (EFF), which has been in limbo since October 2021.

The completion of the review and release of funds under the EFF program will provide much-needed support to Pakistan’s struggling economy, helping to stabilize it and pave the way for future growth.

As per media reports, Saudi Arabia has reportedly agreed to provide a $2 billion loan to help Pakistan address its external financing needs. However, there is no official announcement regarding the timing of the disbursement of the pledged amount. In response to a question, Dr Aisha Ghaus Pasha, Minister of State for Finance & Revenue, mentioned that the UAE’s support would also be crucial in achieving a staff-level agreement with the IMF.

She further added that Pakistan was also in contact with other friendly countries, such as China and Qatar, to bridge the financing gap. The government has not considered any other option besides the IMF program, as the Fund’s requirements and reforms align with the country’s interest in managing domestic and external deficits.

According to recent media reports, the State Minister for Finance & Revenue, Dr Aisha Ghaus Pasha, stated that the IMF’s structural reforms for Pakistan are in the country’s interests and that the government is committed to the IMF program. She emphasized the importance of living within the country’s means, whether in terms of fiscal or external accounts.

Pasha also noted that a Pakistani delegation would attend the spring meetings of the World Bank and IMF in Washington, but there was no word on whether Finance Minister Ishaq Dar would attend. In other news, Dar met with US Ambassador Donald Blome to discuss economic and trade relations, with Blome expressing confidence in the government’s policies and programs for economic sustainability and socio-economic uplift.

Pasha also assured the National Assembly’s Standing Committee on Finance and Revenue that the process for appointing presidents of the National Bank of Pakistan and Zarai Taraqiati Bank Ltd would be completed by the end of the current fiscal year. She acknowledged that these were governance issues and explained that the appointment of the NBP president was re-advertised due to some issues and was pending clearance under the State Bank of Pakistan’s fit and proper criteria.

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