Monday August 29, 2022

Pakistan eyes IMF board crucial meeting on bailout package today

Pakistan eyes IMF board crucial meeting on bailout package today

Picture used for illustrative purposes.

Pakistan is eyeing an important and crucial meeting of the executive board of the International Monetary Fund (IMF), which is to be held on Monday to take a decision on a bailout package for the country.

Pakistan is desperately looking towards the final decision of the IMF as it claims to have completed all requirements of the deal, which is linked with at least $37 billion in loans and investments in the country.

As per details, if the IMF approves the revival of the bailout package, it will be immediately disbursing $1.2 billion with an additional $4 billion during the current financial year.

"The board is likely to approve the disbursement of the 8th and 9th tranche on Monday. Not doing so will send a negative signal, particularly during the floods," said an informed source.

The source further revealed that Pakistan may also request for emergency help from the IMF's Rapid Financing Instrument (RFI), which is likely to bring in additional $500 million.

It should be noted that the IMF board approved disbursal of $1.386 billion to Pakistan in April 2022. This was done under the RFI to cater the economic impact of the Covid-19 pandemic.

The current deal with the IMF holds great value for Pakistan as the country is looking towards materialising loans and investments worth $37 billion, pivotal to get the country away from the kind of financial collapse as seen in Sri Lanka.

It is also pertinent to mention that in the past six weeks, Pakistan has secured loans, financing, deferred oil payments and investment commitments of about $12 billion from countries including China, Saudi Arabia, Qatar and the United Arab Emirates (UAE). This was done to avoid the country from moving towards bankruptcy and default.

However, these financial commitments are pending materialization and availability only after the IMF executive board approves the bailout deal with Pakistan.

Financial experts believe that Pakistan's economy is broad and deep in its geo-strategic position, which is strong enough to avoid default.

"Despite differences Washington still supports the loans through the IMF because a crisis on Afghanistan's border is not something that the US wants to se,e" said Tamanna Salikuddin, director of South Asia programs at the US Institute of Peace (USIP).

However, Tamanna added that Pakistan's critical geo-strategic importance and relevance also keeps the tendency of its political setup to make irresponsible economic decisions, which is because the political leadership in the country perhaps believes that the country is too big and important to fail.

The same concern was also highlighted by the IMF source, who said that the political government and its opposition forces need to end fighting each other over everything if they want to stabilize the country.

Indo-Asian News Service

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