Wednesday, September 28, 2022

Pakistan secures $4 billion from Qatar, UAE and Saudi Arabia to help ease economic crisis

Pakistan will receive $4 billion from friendly countries, including $2 billion from Qatar, amid struggles to ease its funding crunch and avert a looming risk of default.

This was shared by the acting governor of the State Bank of Pakistan, Murtaza Syed during a briefing to stock analysts. The funding is expected to be received over the course of twelve months.

“Pakistan has also successfully secured an additional $4 billion from friendly countries over and above its external financing needs in FY23. As a result, FX reserves will be further augmented through the course of the year, helping to reduce external vulnerability” the State Bank of Pakistan said in its latest monetary policy statement.

The development was reported days before Prime Minister Shehbaz Sharif departed for a two-day official visit to Doha on August 23. The SBP governor, however, did not confirm if an announcement for the $2 billion assistance from Qatar would come during the visit.

The $1 billion from Saudi Arabia would come in for oil financing, while an equal amount comes in investments from the United Arab Emirates (UAE).

The funding will help Pakistan fill up a gap in its foreign reserves, as required by the International Monetary Fund (IMF).

The IMF, which had reached a staff-level agreement with Pakistan in July, announced last week that its executive board would meet at the end of this month to review a stalled $6 billion loan program for Pakistan. However, it has asked the Pakistan government to get financial assistance worth $4 billion to shore up a gap in its foreign reserves before it approves releasing the next tranche.

Last week, Finance Minister Miftah Ismail hinted at getting funds from “friendly countries.”

“The funding of $4 billion has been achieved through our friendly countries Saudi Arabia, UAE, and Qatar,” Ismail had told reporters, saying all prior actions had been met before the scheduled IMF executive board meeting.  

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