Pakistan likely to receive $4 bn from ‘friendly nations’ to bridge forex reserve shortfall

New Delhi: Pakistan’s finance minister Miftah Ismail told the Dawn that the country has fewer than two months’ worth of export-covering foreign reserves and will likely get $4 billion from “friendly nations” to fill the gap, as noted by the International Monetary Fund (IMF).

“We think that we will get $1.2 bn in deferred oil payment from a friendly country. We think that a foreign country will invest between $1.5 bn to $2 bn in stocks on a G2G (government-to-government) basis, and another friendly country will perhaps give us gas on deferred payment and yet another friendly country will make some deposits,” he said without naming the friendly nations, according to news agency PTI.

The news comes two days after the IMF said that, with the board’s approval, it will give the cash-strapped country $4 billion over the course of the following year, starting with a first tranche of $1.2 billion.

In order to revive a $6 billion loan facility, Pakistan and the IMF struck a staff-level agreement on Wednesday. This opened the door for the immediate delivery of a $1.18 billion loan tranche.

“Subject to Board approval, about $1,177 million (SDR 894 million) will become available, bringing total disbursements under the program to about $4.2 billion,” said IMF in a statement.

Additionally, the IMF Board will consider extending the EFF until the end of June 2023 and increasing access by SDR 720 million, which will bring the total access under the EFF to about US$7 billion, in order to support programme implementation, meet the higher financing needs in FY23, as well as spur additional financing.

“Pakistan is at a challenging economic juncture. A difficult external environment combined with pro-cyclical domestic policies fuelled domestic demand to unsustainable levels. The resultant economic overheating led to large fiscal and external deficits in FY22, contributed to rising inflation, and eroded reserve buffers.

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