Chief of the Army Staff General Qamar Javed Bajwa on Friday contacted Saudi Arabia and the United Arab Emirates for the early release of the stalled International Monetary Fund (IMF) loan.
Army Chief General Bajwa made contact with the authorities in Saudi Arabia and the UAE, two friendly countries in the Arabian Gulf and discussed the IMF programme that has been put on hold since early this year.
The extended fund facility worth $1.2 billion with the IMF was discussed with the friendly countries, including the upcoming executive board meeting of the IMF which is expected to ratify the loan program.
As a result of the army chief’s communication, good news for Pakistan’s economy is expected soon. Earlier, the IMF had conditioned the approval of the $1.2 billion loan tranche in late August with Pakistan’s ability to timely secure ‘adequate assurances’ from friendly countries for more loans to bridge financing gap, exposing Islamabad to demands by its bilateral creditors.
In a terse statement, Resident Representative of the IMF Esther Perez said that “with the increase in PDL (Petroleum Development Levy) on July 31, the last prior action for the combined 7th and 8th review has been met”.
The merger will pave the way for the release of nearly $1.2 billion tranche, as against the original schedule of the $2 billion. But Esther remained short of giving a confirmed board meeting date due to what the IMF sees a gap against Pakistan’s gross external financing requirements.
“The board meeting is tentatively planned for late August once adequate financing assurances are confirmed,” Esther Perez said. Earlier, on July 29, Chief of the Army Staff General Bajwa had also appealed to the US to help Islamabad secure an early dispersal of IMF tranche. The Foreign Office on Friday confirmed that there were contacts between General Bajwa and US Deputy Secretary of State Wendy Sherman.
According to Nikkei Asia, Gen Qamar Javed Bajwa spoke by phone with US Deputy Secretary of State Sherman in a highly unusual move earlier this week, according to sources from both the US and Pakistan.
The sources, who requested anonymity because they were not authorized to speak publicly, said Bajwa made an appeal for the White House and Treasury Department to push the IMF to immediately supply nearly $1.2 billion that Pakistan is due to receive under a resumed loan program.
The IMF already granted Pakistan “staff-level approval” for the loan in question on July 13. But the transaction — part of the IMF’s $6 billion Extended Fund Facility for Pakistan — will only be processed after the multilateral lender’s executive board grants final approval.
The IMF is going into recess for the next three weeks and its board will not convene until late August. No firm date has been set for announcing the loan approval for Pakistan, according to an IMF official who also spoke on condition of anonymity.
For Islamabad, time is of the essence in order to stop the depreciation of Pakistani rupee against the US dollar in interbank trading.
Without an immediate lifeline, the inflation-ravaged Pakistani economy will continue to hemorrhage. The rupee has been plummeting against the dollar, and the country has less than $9 billion in foreign reserves left, covering under two months of import bills. On Thursday, S&P Global downgraded Pakistan’s outlook to negative from stable.