- Pakistan has not yet signed the Letter of Intent.
- Moving towards approval: Aurangzeb.
- Pakistan and the IMF reached a staff-level agreement in July.
ISLAMABAD: Pakistan is yet to get confirmation of an external financing gap of between $3-5 billion, even though it has been five weeks since a staff-level agreement was reached under a new Extended Fund Facility (EFF) rescue package.
Pakistan has thus far failed to sign a letter of intent to submit a formal request to the IMF Executive Board for consideration of approving $7 billion under the EFF programme.
Finance Minister Muhammad Aurangzeb and the State Bank of Pakistan (SBP) governor are expected to sign the LoI on behalf of the government and the undertaking will be sent to the IMF executive board with a request for approval of $7 billion under the 37-month EFF programme.
External financing has again been the biggest hurdle to securing a new IMF bailout package. The IMF has published a calendar of items on the agenda for its executive board meeting and Pakistan has not been included in the list of countries for which the IMF board will consider approving loans until August 28, 2024.
This reporter contacted Aurangzeb to ask about the signing of the letter of intent and the IMF Executive Board’s consideration for granting approval to Pakistan’s request for a $7 billion package. In his brief reply, he said, “We are making good progress towards getting the Board’s approval in September.”
Pakistan and the IMF had reached a staff-level agreement on July 12, 2024, and Islamabad's request was expected to be considered for approval by the IMF's executive board in four to six weeks.
When both sides reached the agreement at the staff level, the IMF statement clearly stated that “this agreement is subject to the approval of the IMF Executive Board and timely confirmation of necessary financial guarantees from Pakistan’s bilateral and development partners.”
Pakistan will have to repay $26.2 billion in external debt during the current fiscal year 2024-25, of which there would be a rollover of $12.3 billion in deposits.
The IMF was told that foreign deposits would be renewed for a period of one year. The government wanted to guarantee a renewal for a period of three years, but countries such as Saudi Arabia, China and the United Arab Emirates (UAE) committed to renewing them for one year.
Originally published in The News
