Pakistan waiting for a nod from Gulf states in order to unlock IMF loan

As the International Monetary Fund (IMF) requires confirmation before granting the ninth review, Pakistan is turning to the Gulf governments that had pledged to cover the finance deficit, according to The News.

According to the article, the IMF’s need that Pakistan close the $6 billion shortfall is merely an effort to maintain its reputation. Pakistan might into default if the plan doesn’t materialise.

All eyes are now on the UAE, Qatar, and the Kingdom of Saudi Arabia (KSA) to save Pakistan’s faltering economy.

Pakistan has no choice but to wait and pray for confirmation from its Gulf allies, according to an official who spoke to the journal on the condition of anonymity.

As per the report, the Fund was forced to put forth this condition on the negotiating table largely because representatives of these countries on the Executive Board had made commitments before the approval of the seventh and eighth reviews for providing financial assistance to Islamabad in different forms. These included additional deposits and investments.

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However, they failed to materialise their commitments despite several months passing in the current fiscal year.

“In such a scenario, the IMF has placed the ball in Pakistan’s court for securing 100% commitment from bilateral partners before moving towards the signing of Staff Level Agreement (SLA)

The Fund has informed Islamabad that its credibility would also be at stake if the staff-level agreement is finalsied and Pakistan fails to materlise its commitment from the bilateral partners, it might slide the country into the default zone.

As per the publication, the Fund wants to find the reasons why Pakistan’s bilateral partners are not willing to fullfill their earlier commitments. In such circumstances, the nod of Saudi Arabia, the UAE and Qatar can only help Islamabad in striking a staff-level agreement, said the sources.

Only China had come forward to rescue Islamabad by fulfilling its commitments on the re-financing of its commercial loans as well as the rollover of its SAFE deposits. Pakistan had made a request to roll over SAFE deposits of $2 billion that would mature next week.