According to persons familiar with the situation, Bloomberg reported that the International Monetary Fund wants to determine Saudi Arabia’s commitment to financing Pakistan first before international lender disburses more funds to the South Asian country.
According to the people, who asked not to be named discussing private discussions, the Washington-based lender wants to assure that Saudi Arabia will follow through with up to $4 billion in funding to Pakistan so that Islamabad does not have a funding vacuum following the IMF loan. It’s possible that special drawing rights will be transferred.
The issue is important because, despite the IMF’s scheduled loan of $1.2 billion to Pakistan, Prime Minister Shehbaz Sharif’s administration would not be able to avoid a default on its debt with this amount. According to Bloomberg, Pakistan’s rupee and bonds are losing value as a result of the nation’s financial problems and recent political unrest.
IMF and Pakistan’s Finance Ministry representatives did not immediately reply to requests for comment.Miftah Ismail, the finance minister of Pakistan, made the statement during a conference on July 20 but declined to identify the nation about which the IMF was in talks to provide 2 billion SDR ($2.6 billion). To pay off debt and increase foreign exchange reserves, Pakistan needs to raise at least $41 billion in the upcoming year, which analysts like Saad Khan from IGI Securities Ltd. predict will be barely enough to cover.