Pakistan seeks Saudi Arabia`s confirmation for funds to ink IMF deal
Money tied up Pakistan seeks Saudi Arabia’s confirmation of securing additional $2 billion in deposits and a $950 million loan from the World Bank and AIIB to sign a Staff Level Agreement (SLA) with the IMF, media reports said on Monday.
Pakistan eagerly awaits the $1.1 billion tranche of funding from the International Monetary Fund (IMF), which the global lender refuses unless crucial decisions are made and implemented by the government.
A senior government official dealing with the IMF said: “We are hopeful,” reported The News International newspaper when asked about the possibility of securing deposits from Saudi Arabia and a loan from the World Bank.
The $950 million linked loans from the World Bank’s Resilient Institution for Sustainable Economy (RISE-II) and the Asian Infrastructure Investment Bank (AIIB) will only be approved if Pakistan secures the IMF’s bailout, Geo News reported.
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The ailing country expects to reach the much-needed agreement with the global lender within days, another top official said, adding that the Fund was reluctant to provide a timeline for the agreement to be signed.
“Pakistan is facing difficulties in its talks with the IMF due to increased animosity between China and the United States as they must secure the staffing agreement (SLA) in a delicate balancing act to steer the economy and diplomacy in a way that fits at the greater interest of Islamabad,” the report said.
Islamabad will receive $1.3 billion from China, its all-weather ally, to replenish its rapidly depleting currency reserves, Finance Minister Ishaq Dar said last week after Beijing transferred $700 to the tight country in February.
Pakistan takes several steps at the behest of the Fund for the release of a USD 1.1 billion tranche under the USD 7 billion loan facility, including the unveiling of a mini-budget for raising additional tax revenues of Rs 170 billion through the GST tariff increase from 17 percent to 18 percent.
The government has also increased the electricity rate by more than Rs 7 per unit, imposed another power surcharge of Rs 3.82 per unit, raised the gas tariff allowing huge adjustments in the exchange rate, increased the petroleum development levy and raised the policy rate by 300 basis points, up from 17 percent to 20 percent, the report said.
Pakistan and the IMF held virtual talks after the two sides spent 10 days in intensive negotiations with an IMF delegation in Islamabad from January 31 to February 9, failing to agree on the $1.1 billion tranche of funding from the global lender.
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