Pakistan To Secure Additional Funding More Than Previously Thought: IMF

Pakistan To Secure Additional Funding More Than Previously Thought: IMF
Pakistan will secure far more external funding than previously disclosed to meet its financial obligations.

This has been suggested by key leaders of global financial institutions.

In a report by Bloomberg on Friday, International Monetary Fund (IMF) Pakistan Mission Chief Nathan Porter said that the decision of the Fund's executive board to approve a standby arrangement worth $3 billion over the next nine months for Pakistan was not the only external funding that Islamabad had secured. However, the decision was heavily tied to Islamabad's ability to secure additional external funding.

Nor was it about the $2.8 billion funding gap the IMF and the Federal Finance Ministry grappled with in the days leading up to the board meeting earlier this week and the subsequent transfer of $2 billion from Saudi Arabia.

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The new funding, Porter told Bloomberg, includes $3.7 billion of commitments from bilateral partners, including Saudi Arabia and the United Arab Emirates.

The remainder are from other sources, he said.

However, it is not immediately clear what these external financing sources are. Some of it is from the Asian Development Bank, the World Bank and the Islamic Development Bank (IDB), among a mix of other sources.

In the SBA, IMF said that the cash injection to create space for social and development spending through improved domestic revenue mobilization and careful spending execution to help address the needs of the Pakistani people.

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It added that the external monetary shocks as well as ” policy missteps — including shortages from constraints on the functioning of the FX (foreign exchange) market—economic growth has stalled. Inflation, including for essential items, is very high.”

Even though Islamabad took steps to curtail imports and the trade deficit, the country’s reserves have continued to plummet to a point where Pakistan did not have sufficient reserves to pay for a month’s worth of imports.