Pakistan set get guarantees of Additional funding of $4 billion from friendly countries this week, which will pave way for revival of program of the International Monetary Fund (IMF), State Bank of This was stated by the Acting Governor of Pakistan (SBP), Dr. Murtaza Syed. on Wednesday.
Saudi Arabia is first country that agreed to give commitment to the IMF, most importantly government source confirmed.
“Discussions are going on place on various options provide guarantees for $4 billion in funding and we hope it gets done this week,” the interim governor said. in exclusive interview with Express Tribune. Pakistan was also in discussions with China for additional funding, added.
Read IMF tightens stance on issuance of a credit tranche
Least one country gave guarantees to the IMF on Finance Minister Miftah Ismail confirmed to The Express Tribune on Wednesday without revealing a name.
Just like the other senior government The official said that Saudi Arabia has pledged to provide the funds.
Governor and Finance Statement minister came on heels of IMF statement that global the lender will call in board meeting to approve Pakistan’s request for revival of program after it provided guarantees for $4 billion in funding.
Assurances expected to end uncertainty in markets and supply government and central bank on solid basis for management current a crisis.
executive directors (of friendly countries) currently just need to pick up telephone and inform the head of mission of Pakistan that they are ready give definite amount for 12 months, said Dr. Syed.
As soon as Pakistan can show in available financing, the IMF will convene board meeting in two weeks,” the acting governor said. He added Pakistan and IMF agree on letter of intentions, and it will be signed after the financial guarantees are formalized.
board meeting to approve $1.2 billion loan tranche in in addition to extending the program until June next year and increase total up to $7 billion.
UAE were more interested in potentially acquiring some assets, Saudi Arabia is ready give loans and oil on deferred payments.
Pakistan studies various options look for chinese financial help, which includes cash deposits, commercial loans and an increase in the bilateral currency swap limit. Any of these options may be increased, said Acting. governor.
“We are constantly in discussions with China like ours view these are currency swaps should also used for bilateral trade. China has understood logic what is important for increase in bilateral trade”.
Acting Governor Says $4 Billion Financing Is Responsibility of both Pakistan and the IMF, but the burden more on us because we need in money. IMF also aid to Pakistan in obtaining these guarantees.
Dr. Syed said that against estimated external funding of US$34 billion requirementsPakistan has already lining up $36 billion and an additional $4 billion. demand is for an increase in foreign exchange reserves.
IMF says Pakistan’s position with foreign exchange reserves is “uncomfortable” and Pakistan wants to create an additional cushion, he said. added.
Read more Pressure on Rupee weakens after IMF deal
When asked, he said that there were negotiations with Saudi Arabia on borrowing its special drawing rights, but the IMF has not yet developed mechanism for what. The IMF is expected to complete framework for structure of such a deal to the end of this is year and if Pakistan can borrow Saudi SDRs under the IMF facility, it will should do it, said the acting governor.
Delay in IMF program cost pakistan lot of foreign exchange reserves. Reserves, which amounted to 17 billion dollars in February, were exhausted half due to external debt repayment.
Dr. Syed said the political uncertainty also reduced after government made a statement that complete this is term in office.
Combination of political uncertainty and high current The account deficit seems to be getting under control, which also helped strengthen the rupiah on Wednesday, the acting governor said. He said that the exporters also dumped my dollars in in the market what led to improved inflow and how result rupee returned record 10 rupees per dollar in in one day and closed at a price of 229 rupees.
excess of rupee against United States dollar began to improve and will recover in in next several months, the governor hoped.
He said that current the account deficit will improve because of tightening of monetary policy while fiscal policy will be further tightened under the IMF program.
Dr. Syed said that about half of reduction in Meaning of Pak rupees from December was because of strengthening of United States dollar against other currencies. Rest half was because of height current account deficit and sentiment about the IMF program; and political uncertainty.
During past one as well as half months exporters were also delays export earnings, while importers rushed to import goods due to negative sentiment.
Acting Governor reported that the structure of Pakistan economy based on consumption and imports. Investment and savings are low, leading to higher current account deficit whenever a country grows by higher rate.
in short termPakistan does not have option but rely on foreign loans to meet our financing requirements added.
The Acting Governor said that as soon as the situation improves, the restrictions imposed on import will be raised in three months.