The International Monetary Fund’s (IMF) Executive Board approved a $7 billion Extended Fund Facility (EFF) for Pakistan this Wednesday. The first $1.1 billion tranche will be released by September 30, 2024.
Ministry of Finance sources report an interest rate under 5% for the loan. The IMF plans a second disbursement within this fiscal year.
Pakistan and the IMF agreed on this 37-month loan program in July. Prime Minister Shehbaz Sharif views it as the nation’s final IMF engagement.
Read: Prime Minister Shehbaz Sharif Engages in Critical IMF and UN Meetings
Approval followed confirmation of $12 billion in bilateral loans from Saudi Arabia, China, and the UAE, plus $2 billion in external financing.
Insiders reveal that Pakistan must repay $5 billion in cash deposits to Saudi Arabia, with an additional $4 billion from China and $3 billion from the UAE.
To gain IMF approval, Pakistan needed to secure $2 billion from bilateral and commercial lenders.
The IMF later pinpointed an external financing gap of $2 to $2.5 billion. Saudi Arabia confirmed its support with an oil facility and a $400 million ITFC facility from IsDB. Other contributions came from Standard Chartered Bank and Middle Eastern commercial banks, according to The News.
Islamabad has long relied on IMF programs, often nearing sovereign default. It has turned to countries like the UAE and Saudi Arabia to meet IMF-prescribed external financing goals.
