Pakistan optimistic of securing IMF approval for US$3 billion bailout

PAKISTAN’S Prime Minister Shehbaz Sharif said he was optimistic that the International Monetary Fund will approve a US$3 billion bailout at its board meeting on Wednesday (Jul 12).

Pakistan and the Fund reached a staff level agreement last month, securing much-needed funding for the cash-starved country.

The agreement needs the board’s approval before disbursing US$1.1 billion upfront and the rest of the money in instalments.

“The meeting is happening today,” Sharif said at an event in Islamabad. “I hope the board will approve the programme. This programme will help Pakistan’s economy to stabilise.”

The nine-month short-term lifeline for Pakistan’s ailing economy, which has been on the cusp of default, came after eight months of tough negotiations over fiscal discipline.

The US$350 billion South Asian economy faced a crippling balance of payments crisis, with its central bank’s reserves barely enough to cover a month of controlled imports.

The IMF board approval will also unlock other bilateral and multilateral external financing for Pakistan.

The United Arab Emirates deposited US$1 billion with Pakistan’s central bank to support foreign exchange reserves, Pakistan’s Finance Minister Ishaq Dar said on Wednesday.

Beijing rolled over US$5 billion of Pakistan’s loan in the last three months, which Sharif said he believed played a major role in averting the debt default.

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Saudi Arabia deposited US$2 billion in support funds with the central bank on Tuesday. Dar added that the inflows from the UAE and Saudi Arabia would be reflected in the country’s reserve data that will be released on Thursday.

Fitch credit rating agency on Monday upgraded Pakistan’s sovereign rating to CCC from CCC-, and the bailout has brought relief to investors in the country’s stocks and bonds. REUTERS