The International Monetary Fund (IMF) on Tuesday made it clear that it would only approve the $1.2 billion loan tranche in late August if Pakistan could promptly obtain ‘adequate assurances’ from friendly nations for additional loans to close the funding gap. This left Islamabad open to demands from its bilateral creditors.
Esther Perez, the IMF’s resident representative, stated in a succinct statement that “the last preparatory action for the combined 7th and 8th review has been met with the rise in PDL (Petroleum Development Levy) on July 31.”
As opposed to the previous schedule of the $2 billion, the merger will allow for the release of an approximately $1.2 billion tranche.
Esther didn’t, however, provide a specific date for the board meeting because the IMF believes there is a mismatch between Pakistan’s gross external funding needs and what Pakistan has available.
Once sufficient finance assurances are verified, the board meeting is tentatively scheduled for late August, according to Esther Perez.
Two days after the Ministry of Finance and the State Bank of Pakistan asserted that they had satisfied the financing requirements for the current fiscal year, the IMF made the surprise announcement.
General Qamar Javed Bajwa, the chief of the army staff, has also pleaded with the US to assist Islamabad in obtaining an early distribution of $1.2 billion. General Qamar Javed Bajwa and US Deputy Secretary of State Wendy Sherman have spoken, the Foreign Office confirmed on Friday.
It appears that the contacts did not assist Pakistan in obtaining a fixed date for an early board meeting. Islamabad would need to persuade the three major bilateral creditors to formally confirm to the IMF their willingness to contribute $4 billion in finance.
Finance Minister Miftah Ismail stated last month that the financial shortfall was $4 billion compared to the expected finance requirements of over $35 billion, even though the IMF did not publicly disclose the exact size of the financing deficit.
The $4 billion will really result in an increase of almost $6 billion in foreign exchange reserves in this fiscal year, according to Miftah Ismail, who claimed there is no financial shortfall.