United Arab Emirates’ President and ruler of Abu Dhabi Sheikh Mohammed bin Zayed Al Nahyan in conversation with Pakistan’s Prime Minister Shehbaz Sharif (Image: Reuters)
Pakistan’s economy could get a boost as UAE confirms its commitment to provide $1bn support to the country, increasing chances for the IMF SLA.
Pakistan finance minister Ishaq Dar on Friday said the United Arab Emirates (UAE) confirmed its commitment to the International Monetary Fund (IMF) for the bilateral financial support of $1 billion to the country.
The finance minister took to Twitter to make the announcement. “UAE authorities have confirmed to IMF for their bilateral support of US $1 billion to Pakistan. State Bank of Pakistan is now engaged for needful documentation for taking the said deposit from UAE authorities,” Dar said in a tweet.
The Dawn in a report said that this is expected to lead to staff- level agreement (SLA) between the international lender and the Pakistan government and lead to unlocking of multilateral disbursements.
IMF program — 9th Review Update:UAE authorities have confirmed to IMF for their bilateral support of US $ One billion to Pakistan.
State Bank of Pakistan is now engaged for needful documentation for taking the said deposit from UAE authorities.
AlhamdoLilah!
— Ishaq Dar (@MIshaqDar50) April 14, 2023
The negotiations between Pakistan’s finance ministry and the IMF have been going on since early February. The Pakistani government wants the IMF to revive the $7 billion bailout programme to secure a $1.1bn tranche.
The report by Dawn said that the IMF tranche is critical for Pakistan and it will unlock other “external financing avenues” amid fears that Pakistan could default on its debt obligations.
Pakistan’s forex reserves dipped by $170m to $4bn, largely due to debt payments, the State Bank of Pakistan said earlier this week. Pakistan’s overall foreign currency reserves, which includes bank reserves, decreased by $195 million or 2% to $9.56 billion compared to the previous week. Pakistan’s dwindling foreign currency reserves put pressure on the import-heavy economy, leading to business closures and rising prices.
Prime Minister Shehbaz Sharif in March said the IMF wanted external financing commitments fulfilled from friendly countries before releasing bailout measures. The Dawn in its report claimed that Saudi Arabia, China and the United Arab Emirates made commitments to help Pakistan fund its balance of payments.
The IMF earlier this week, too, expressed hope that its current programme with Pakistan will be completed successfully.
“My hope is that with the goodwill of everyone, with the implementation of what has been already agreed by the Pakistani authorities, we can complete our current programme successfully,” IMF Managing Director Kristalina Georgieva said at a news briefing in Washington, according to the Dawn.
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