UAE has confirmed its commitment to the International Monetary Fund (IMF) for its bilateral financial support of $1 billion to Pakistan, according to Pakistan’s Finance Minister Ishaq Dar. This brings Pakistan a step closer to securing a deal with the lender, which is critical for avoiding default. The State Bank of Pakistan (SBP) is now “engaged for needful documentation for taking the said deposit from UAE authorities”. Additionally, the SBP will receive the third and last disbursement from the Industrial and Commercial Bank of China (ICBC) worth $300 million, out of its $1.3bn loan.
These developments are expected to lead to the much-delayed staff-level agreement (SLA) with the Fund and unlock multilateral disbursements. Since early February, Pakistan has been negotiating with the IMF to revive the $7bn bailout programme to secure a $1.1bn tranche. With central bank reserves falling to critical levels, hovering around $4bn and barely able to cover a month of imports, the IMF tranche is critical for the country as it will also unlock other external financing avenues, helping Pakistan avert a default on its obligations.
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Several friendly countries such as Saudi Arabia, China and the United Arab Emirates had made commitments to help Pakistan fund its balance of payments. The lender wanted external financing commitments fulfilled from friendly countries before it released bailout funds. The IMF Managing Director Kristalina Georgieva said at a news briefing in Washington that she hoped to complete the current programme with Pakistan successfully. The IMF and Pakistani officials, she said, were discussing how to support Pakistan “in terms of providing financial assurances so we can complete the programme”.