On Wednesday, the executive board of the International Monetary Fund (IMF) will vote on whether or not to endorse the staff-level agreement with Pakistan, which would provide a $3 billion stand-by arrangement (SBA) to help the cash-strapped country.
Sources indicate that the board will also agree to issue the first $1.1 billion of the $3 billion credit arrangement.
Pakistan has signed a standby agreement with the IMF to receive $3 billion over the course of nine months, provided that the release of such funds is approved by the IMF’s executive board.
Also, the global money lender has accepted the Ministry of Finance’s $8.2 billion financing gap plan, therefore the issue of external finance has been resolved.
The Saudi Arabian government has given Pakistan two billion dollars.
As part of a plan to raise funds in accordance with a requirement established by the IMF for the latest bailout package, Pakistan obtained a $2 billion Saudi loan for one year the day before, giving the stricken government some much-needed relief.
A senior cabinet minister had announced two weeks ago that Saudi Arabia had offered the loan for one year at an interest rate that was higher than the previous facility rate of 4%, but the minister did not officially disclose the conditions of the loan.
Accord is reached between the IMF and Pakistan’s staff
In a long-awaited decision for a country facing a significant danger of default, the IMF and Pakistan secured a staff-level agreement on the $3 billion stand-by arrangement last month.
Pakistan, which is experiencing a severe balance of payments problem and dwindling foreign exchange reserves, will receive much-needed assistance from the accord, pending approval by the IMF board.
The lender announced in a news release on June 29 that the new SBA will aid Pakistani efforts to stabilise the economy in the wake of recent external shocks, maintain macroeconomic stability, and lay the groundwork for funding from multilateral and bilateral partners.
With better domestic revenue mobilisation and rigorous spending execution, the new SBA will make room for social and development spending to assist meet the needs of the Pakistani people.
Greater fiscal discipline, a market-determined exchange rate to absorb external pressures, and further progress on reforms, particularly in the energy sector, to promote climate resilience, and to help improve the business climate are all essential for Pakistan to overcome its current challenges, according to the report.
According to a news release issued by the IMF, the new SBA is meant to help Pakistan stabilise its economy by assisting with the effects of recent external shocks, helping to keep macroeconomic stability intact, and laying the groundwork for funding from bilateral and multilateral partners.
