The United Arab Emirates has committed to financing Pakistan for $1 billion (UAE) as per reports
According to sources in the Ministry of Finance (MoF), a written guarantee in this respect is also anticipated in the next week after Finance and Revenue Minister Ishaq Dar made a particular request to the UAE officials.
The International Monetary Fund (IMF), which is seeking assurances for Pakistan from friendly nations including the UAE, will be able to release a $1.3 billion pending tranche as a result of the UAE's financing.
The UAE is expected to give a written guarantee for a $1 billion loan this week. The Finance Secretary Hamed Yaqoob Sheikh will inform Fund officials during the annual meeting presently taking place in Washington about this development.
To close its balance of payment imbalance for this fiscal year, which ends in June, the international financial institution has asked Pakistan to obtain guarantees on external financing from allies and multilateral partners.
Saudi Arabia informed the IMF last week that it will finance Pakistan with a $2 billion pledge.
The new development followed requests made to UAE officials by Prime Minister Shehbaz Sharif and Finance Minister Ishaq Dar for the completion of Fund criteria.
Saudi Arabia offers Pakistan a $2 billion guarantee.
As a result of Saudi Arabia's commitment for an additional $2 billion in deposits to the international lender, Pakistan moved one step closer to the renewal of the key rescue package from the International Monetary Fund (IMF).
One of the main requirements for restarting the loan agreement that has been on hold since last year, the IMF has informed the Pakistani authorities about the confirmation.
Even though Pakistan met the IMF's requirements by increasing taxes, raising energy costs, and allowing free currency movement, the loan programme has yet to be implemented. The country has repeatedly missed deadlines to resurrect the agreement. Before releasing the funds, the Washington-based lender has instructed Pakistan, which is short on cash, to secure commitments for additional loans from Saudi Arabia and the United Arab Emirates (UAE).
According to reports, the Kingdom has not yet made an official declaration in this regard. More loans for Pakistan are anticipated to be announced by the Saudi government during Prime Minister Shehbaz Sharif's imminent visit.
For a further $1 billion deposit to complete the staff-level agreement (SLA) with the IMF, Pakistan is now looking to the UAE.
On his trip to the US, where he would hold negotiations about reviving the loan agreement, Finance Minister Ishaq Dar is likely to make a detour in the UAE.
Pakistan still needs to accomplish a few tasks before it can qualify for a $6.5 billion bailout, according to the resident representative of the IMF for Pakistan.
If the IMF rescue is postponed further, the economic unrest may get worse as foreign exchange reserves continue to disappear. Just $4.24 billion of Pakistan's $9.82 billion in total foreign reserves—barely enough to cover three weeks' worth of imports—is held by the State Bank of Pakistan.
The IMF has also required a decrease in the importation of fuel and diesel as well as funding to make up any shortfalls in petroleum taxes and levies according to sources.