In a significant development towards reviving the stalled bailout programme, the authorities in the United Arab Emirates (UAE) have pledged to provide $1 billion in bilateral support to Pakistan, according to Finance Minister Ishaq Dar.
Dar tweeted, “UAE authorities have confirmed to the IMF for their bilateral support of $1 billion to Pakistan.” He also stated that the State Bank of Pakistan is currently in the process of completing the necessary documentation to receive the deposit from the UAE authorities.
Pakistan was required to provide assurance that its balance of payments deficit is fully financed for the remaining period of the IMF programme, which has been stalled since November last year. Last month, the IMF’s Director of Strategic Communications, Julie Kozack, emphasised that “timely financial assistance from external partners will be critical to support the authorities’ policy efforts and ensure the successful completion of the review [with Pakistan].” She added, “Ensuring that there is sufficient financing to support the authorities is the paramount priority. A Staff Level Agreement (SLA) will follow once the few remaining points are closed.”
Earlier this month, Saudi Arabia also pledged to provide a $2 billion loan to Pakistan, according to Pakistan’s Minister of State for Finance Aisha Ghaus Pasha. The country’s economic situation has been further exacerbated by months of political and economic turmoil, crippling floods last year and record inflation. Pakistan has been grappling with a debt crisis and foreign exchange reserves have fallen to less than four weeks of imports.
In an effort to ease the situation, China has agreed to refinance $2 billion, of which $1.7 billion has already been credited to Pakistan’s central bank. China also rolled over a $2 billion loan last month, providing relief during Pakistan’s acute balance of payments crisis. However, talks with the IMF for a delayed $1.1 billion loan tranche, part of the bailout agreed in 2019, have been ongoing.