Pakistan has received a $2 billion relief from the UAE, extending a maturing debt and prompting the interim government to request a new IMF mission. The IMF has adjusted its staff-level report, increasing budget support loans to $3 billion but cutting project financing to $3.7 billion for the fiscal year. External financing requirements have been reduced to just under $25 billion, with minor adjustments in current account deficit projections.
The State Bank of Pakistan Governor, Jameel Ahmad, confirmed the UAE’s extension of the $2 billion debt repayment for another year. The IMF has disbursed the second loan tranche of $706 million, totaling $1.9 billion under a $3 billion bailout program, providing relief amid low foreign exchange reserves.
The UAE has agreed to roll over a $1 billion debt for another year, with another $1 billion debt maturing on January 23. Additionally, the UAE, Saudi Arabia, and China have deposited a total of $12 billion, with official reserves standing at under $9 billion.
The finance ministry has requested the IMF to send a new mission for the second review to secure the last loan tranche of $1.2 billion, aligning with the interim Finance Minister Dr. Shamshad Akhtar’s previous statement. However, the IMF’s response to Pakistan’s request is pending.
The timing of the IMF’s next mission may be influenced by the upcoming general elections on February 8. Former finance minister Ishaq Dar mentioned that the decision about a new IMF program would be made promptly if his party won the elections, emphasizing the critical nature of the next IMF mission.
The IMF’s adjustments include a reduction in current account deficit projections and external financing requirements, as well as changes in available project financing and budget support loans. These developments reflect a complex financial landscape and underscore the ongoing negotiations and financial adjustments Pakistan is navigating.
