UAE closes the gap of external financing

Arab countries show green light, but is it enough? 

ISLAMABAD: Finance minister Ishaq Dar on Monday confirmed that Saudi Arabia and the United Arab Emirates (UAE) informed the IMF about their commitments to provide $3 billion to Pakistan.

Abu Dhabi has promised $1 billion funds and Riyadh is expected to release $2 billion in the next few days, elaborated Dar to Geo News. 

The stalled IMF program sought an external financing assurance of around $6 billion from Pakistan which is necessary to bridge Pakistan’s external financing needs. With the last dollar injection from the UAE, all eyes are on the Washington-based money-lender to release the $1.1 billion tranche. 

In a presser, Dar elaborated that Riyadh will provide $2 billion while Abu Dhabi has promised $1 billion to Pakistan. “Pakistan is hopeful that the IMF will soon sign the Staff Level Agreement (SLA) and get it approved by its Executive Board,” he added.

These funds, which were expected to be confirmed in January, saw a delay when the crown prince of UAE postponed his visit to Islamabad at the last minute. 

In recent weeks neighboring China also rolled over $2 billion and refinanced another $1.3 billion in recent weeks. The country also expects to receive an estimated amount of $600 million from the world bank and other multilateral flood-relief commitments.

It seems like the financing gap won’t be an issue for the IMF, previously the macroeconomic state institutions swallowed bitter pills to appease the fund. This included jacking up its key policy rate to an all-time high of 21%, a market-based exchange rate, arranging for external financing, and raising more than Rs 170 billion ($613 million) in new taxes.

The fiscal adjustments have already fueled Pakistan’s highest inflation ever, which climbed in March to more than 35% on the year.

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Momina Ashraf
Momina Ashraf
Momina Ashraf is an assistant editor at Profit.


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