Pakistan and the International Monetary Fund (IMF) may begin negotiation on May 18 in Doha as a country options to avoid insolvency was limited after he could not immediately receive any large financial support of three friendly countries.
Subject to government readiness start withdrawal of fuel subsidies from May 15, both parties tentatively scheduled a meeting in Qatar for policy level discussions to revive the program and increase its duration and size to $8 billion, senior government functionary said Express Tribune.
IMF informed government so that he can send mission to Doha for one week on May 18 for negotiation with Pakistan on revival of Extended Funding Fund, officials said. However, before that, Prime Minister Shehbaz Sharif will have to overcome all obstacles from members of his cabinet and decision on fuel subsidies.
Sources said that Prime Minister Shehbaz once instructed the Ministry of Finance again ask the IMF to partially ease his condition of rising fuel prices.
development comes late in completion of new credit transactions with Saudi Arabia, China and the United Arab Emirates (UAE).
Pakistan is waiting for an extension of Chinese commercial loan of $2.3 billion. Another $1 billion Chinese deposit is due to expire and next month.
China made a condition for update of its $2.3 billion loan, which Pakistan repaid in March on Hope of get it back in April but still remains unspent.
Sources said that China wanted that his credits cannot be used for for any purpose and should considered only as part of reserves because of weakening Pakistan financial situation.
government asked for a loan money should at least allowed use for making payments against Chinese import. Sources added what decision expected.
No dates for The first visit of Prime Minister Shahbaz to China took place. announced but the possibility of visual contact between heads of the two governments are being investigated, the sources said.
The Ministry of Finance is not officially comment on cause.
Sources talk about prospects for immediate additional cash Saudi Arabia’s injections before the deal with the IMF were not very high. However, it is unlikely that the kingdom will withdraw $3 billion. cash object that was insured in november last year at interest rate of 4%.
Chances for receiving more butter on deferred payments over and above the existing limit of 100 million dollars a month were also low, they added.
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Late last country secured a $1.2 billion annual oil loan ($100 million per month) on deferred interest payment rate of 3.8%.
Instead, the sources said, Saudi Arabia offered assistance to Pakistan. in obtaining an oil loan from the commercial arm of the Islamic Development Bank, the International Islamic Trade Finance Corporation (ITFC), or from the Organization of Fund of the Petroleum Exporting Countries (OPEC) for International development.
But the facilities of the ITFC and the OPEC Fund will be different from what Pakistan was looking for. Pakistan already use of the ITFC oil credit line at 4.5% per annum rate.
government It was also asked Saudi Arabia reduce interest rates on existing cash and oil facilities, but it seemed difficult.
Last month, Finance Minister Miftah Ismail asked the IMF to extend the duration of the program from September 2022 to June 2023 and also to increase the size of the loan from $6 billion to $8 billion.
The situation with the external finances of the country remain unreliable as it is left with total $10.5 billion gross official foreign exchange reserves, while its monthly import bill was $6.6 billion. in April.
$10.5 billion inclusive of $4 billion of China, $3 billion of Saudi Arabia and $2.5 billion. of deposits in the UAE.
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Former State Bank of Governor of Pakistan (SBP) Dr. Reza Bakir pumped up billions of dollars in exchange market to protect the weakening rupee, but ended up loss of precious reserves, Treasury Department sources say.
PML-N led coalition government seems in a fix over This policy options for governing the country out of in current serious economic crisis. The deal with the IMF possible without first elimination of fuel subsidies, but there appears to be a deep division inside government.
Some senior party cabinet leaders and ministers recommended prime minister against rising prices for gasoline and diesel fuel, which complicates the work for finance minister.
Currently government subsidizes 29 rupees per liter on gasoline and 73 rubles. on high speed diesel fuel, which both the Treasury and the IMF want reverse.
Previous PTI government planted mines because it not only gave these subsidies, but also provided wrong estimates of in cost. former finance minister initially said fuel subsidies would cost 146 billion rupees for March-June period.
However, the Economic Coordinating Committee (ECC) already subsidies of Rs 101 billion approved by 30 April and estimates for Could be 102 billion rupees.
IMF also reception of mixed signals, tk. former finance minister Ishak Dar publicly opposed the extension of the program until June next year and raising fuel prices, arguing that government should negotiate a new deal.
However time is running out as government It has made financial announcement plan year 2022-23 budget on June 10th and prior to that, approval is required with IMF.