The International Monetary Fund (IMF) announced on Saturday that it is awaiting “necessary financing assurances” before concluding the review talks, delaying any potential deal until Pakistan secures the remaining $3 billion.
In an early morning statement, Nathan Porter, the IMF Mission Chief to Pakistan, expressed his anticipation for obtaining the required financing assurances as soon as possible, enabling the successful completion of the 9th Extended Fund Facility (EFF) review.
Sources close to the matter revealed that the IMF is seeking confirmation of the total $6 billion loans required by Pakistan to close its external financing gap. The government is working to secure commitments for the remaining $3 billion by next week. However, Finance Minister Ishaq Dar had asked the IMF to demonstrate flexibility and agree to a staff-level deal, which he believes could facilitate the arrangement of the remaining loans.
Arranging the rest of the loans may take some time, with foreign commercial banks being cited as one of the sources to help close the gap. Finance ministry officials estimate that negotiations could take four to six weeks before foreign commercial loans can be disbursed. They believe a deal can be reached if the foreign commercial banks assure the IMF. However, foreign banks hesitate to provide new financing due to Pakistan’s poor credit rating.
Pakistan had also considered the $450 million project proceeds from the Geneva pledges and over half a billion dollars from outsourcing three international airports as potential funding sources. Still, these options may not be immediately accessible.
Finance Minister Ishaq Dar announced on Friday that the United Arab Emirates had assured the IMF of a $1 billion loan to Islamabad. According to Minister of State for Finance Dr. Aisha Pasha, Saudi Arabia had already committed to a $2 billion loan. However, the commitments fall short of Pakistan’s needs.
Porter acknowledged key bilateral partners’ recent financial support announcements, implicitly confirming the UAE and Saudi Arabian commitments. He also mentioned that the IMF is backing Pakistan’s efforts to obtain the loans.
Dar had requested loans of $900 million from the World Bank and the Asian Infrastructure Investment Bank to close the financing gap, but Pakistan has yet to meet all conditions set by the World Bank. The Washington-based bank also awaits the IMF’s decision before approving any new budget support loans.
It seems that the IMF still has concerns about Pakistan’s economic policies, as it demanded an interest rate increase of at least 6% when the key policy rate was 17%. However, the central bank has raised the rate to 21% in the past two months, which is still short of the IMF’s requirement for inflation-adjusted positive interest rates.
 is awaiting necessary financing assurances before concluding loan review talks with Pakistan, as the country works to secure the remaining $3 billion of the required $6 billion.){kind=link}