The UAE has come to the rescue of Pakistan once again. The UAE authorities have a word with IMF regarding the guaranty crucial for cash-starved Pakistan to secure a much-needed IMF program that the nuclear-armed South Asian Muslim nation has been looking for a long time.
According to Finance Minister Ishaq Dar, the United Arab Emirates has confirmed its commitment to provide bilateral financial support of $1 billion to Pakistan. The UAE authorities have informed the International Monetary Fund (IMF) about their commitment, and the State Bank of Pakistan (SBP) is now engaged in completing the necessary documentation to receive the deposit from the UAE authorities. This development is expected to pave the way for a staff-level agreement (SLA) with the IMF, which would unlock multilateral disbursements. Pakistan has been in negotiations with the IMF since early February to revive its $7 billion bailout program and secure a $1.1 billion tranche.
The IMF tranche is critical for Pakistan as its central bank reserves have fallen to critical levels, at around $4 billion, and it needs external financing to meet its obligations and avoid default. Several friendly countries, including Saudi Arabia, China, and the UAE, have made commitments to help Pakistan fund its balance of payments.
Last month, Prime Minister Shehbaz Sharif stated that the IMF wanted external financing commitments fulfilled from friendly countries before releasing bailout funds, and the commitment from the UAE is expected to be a positive development in that regard.
IMF Managing Director Kristalina Georgieva expressed optimism about completing the current program with Pakistan successfully but also emphasized the need for Pakistan to implement the agreed policy framework to avoid unsustainable debt levels. She mentioned that the purpose of the IMF-Pakistan talks was to prevent Pakistan’s debt from becoming unsustainable and that they were discussing how to provide financial assurances to support Pakistan in completing the program. Observers noted that while the IMF chief expressed hope, she sounded less enthusiastic compared to Pakistani officials who have been optimistic about clinching the deal