Pakistan Govt Shares Plan With IMF To Secure Additional $3 Billion External Financing: Report

Pakistan told the global lender that it plans to secure a $450 million worth of support loan from the Resilient Institutions for Sustainable Economy (RISE-II) budget. 

The Shehbaz Sharif government has also shared its plans to get $1 billion from Asian Infrastructure Investment Bank (AIIB) and other commercial banks to materialise pledges secured at the Geneva moot.

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Pakistan's government has shared its plan with the IMF to secure an additional $3 billion in an effort to get the stalled bailout package. According to a local media report, Pakistan told the global lender that it plans to secure a $450 million worth of support loan from the Resilient Institutions for Sustainable Economy (RISE-II) budget. 

The US-based global lender had asked Pakistan to arrange $6 billion in external financing to get a $1.1 billion tranche of funding. But so far the country was alone able to arrange $3 billion. Saudi Arabia had agreed to provide $2 billion and the UAE pledged $1 billion. 

On Wednesday, the Express Tribune reported that the Pakistan Muslim League-Nawaz (PML-N) led coalition government has informed the IMF about its plan to secure a $450 million worth second Resilient Institutions for Sustainable Economy (RISE-II) budget support loan. 

The report also added that the $6 billion external financing condition was worked out on the premise that Pakistan’s current account deficit would remain around $7 billion in the current fiscal year ending on June 30. 

The Shehbaz Sharif government has also shared its plans to get $1 billion from Asian Infrastructure Investment Bank (AIIB) and other commercial banks to materialise pledges secured at the Geneva moot. The Geneva conference held in January this year pledged several billion dollars to help Pakistan combat the challenges of climate change.

40 countries committed a sum exceeding $10 billion for 2022 devastating floods causing around $30 billion in infrastructure and economic damages.

Official sources told the news agency PTI that Pakistan has requested approval for $1.1 billion in funding from a $7 billion bilateral programme agreed upon in 2019 to facilitate raising loans from the international market.

The PTI report also noted that up until the IMF approved its loan to Pakistan, all bilateral and multilateral donors and governments declined to clear their loans. During negotiations in February, the IMF proposed stringent requirements and refused to endorse a staff-level agreement to release funds.

The Shehbaz Sharif government has expressed its distress with the strict requirements set by the IMF but is compelled to comply out of fear of default.

But it is believed that the chances are slim and Pakistan would have to provide assurances that it would arrange $3 billion to bridge the financing gap, the report added. 

The $1.1 billion tranche of a larger package intended to keep the country from falling bankrupt, the report said. According to analysts, the funds are a crucial component of a $7 billion bailout package that the IMF agreed on in 2019, if Pakistan is to avoid defaulting on its debt.