ISLAMABAD: Pakistan has shared its revised external financing plan to bridge the gap of $5 to $6 billion by the end of June 2023 and requested the IMF to strike a staff-level agreement as early as possible, it has been learnt.
Top official sources confirmed to The News on Tuesday night that differences persisted over the exact financing requirement as the IMF insisted upon managing the gap of $6 billion while the Pakistani authorities were projecting the external financing gap in the range of $4 to $5 billion till the end of June 2023.
However, the IMF made it clear during the recent meetings with Pakistani officials who visited Washington and those who participated from Islamabad through Zoom that Pakistan required a credible plan to manage the financing of $6 billion for striking a staff-level agreement with the Fund. Pakistani high-ups, including Minister for Finance Ishaq Dar, are currently visiting the Kingdom of Saudi Arabia for performing Umra and, on the sidelines, all-out efforts are underway for signing a deal on additional deposits of $2 billion.
There is also the possibility of further Government to Government (G2G) assistance from the KSA, but nothing can be firmed up at this stage. On the other hand, the United Arab Emirates (UAE) gave its commitment to the IMF for an additional $1 billion deposit and efforts are underway to jack up the amount. “Announcements are likely during the next few days on additional external financing requirements of Pakistan,” said an official.
On other hand, the Chinese government is likely to provide $1 billion through commercial banks. Pakistani authorities told the IMF during discussions that striking the staff-level agreement would help Islamabad secure more financing from multilateral creditors and commercial loans from banks based in Abu Dhabi. The World Bank’s RISE programme, along with co-financing of the AIIB, could fetch $900 million.
The government expects that the project financing on flood assistance would also bring in dollar inflows. When contacted, a top official of the Finance Ministry said they were in constant touch with the IMF for making all-out efforts to strike the staff-level agreement.
Another outstanding issue is lingering on how the 10th and 11th Reviews would be undertaken when the ongoing Extended Fund Facility (EFF) programme would be accomplished by the end of June 2023. This leaves only two months and 10 days and the 9th Review has not yet been completed.
Also, differences persisted over the exact financing requirements between the IMF and Pakistani sides because both sides assessed different numbers on account of the Current Account Deficit (CAD).
The IMF estimated that the external financing gap hovered around $6 billion, but Pakistan authorities persistently argued that it would remain in the range of $4 to $5 billion, keeping in view the shrinking CAD.
The Current Account Deficit shrank and stood at $3.8 billion during the first eight months (July-Feb) period of the current fiscal year 2022-23 against $12.07 billion in the same period of the last financial year 2021-22.
The current account deficit reduced sharply and stood at just $74 million in February 2023 mainly because of compressed imports. Pakistani authorities claimed that the CAD would be restricted to around $4 billion in the current fiscal year, but the IMF assessed that it might go up to $5-$6 billion if the government eased restrictions on the clearance of stuck-up containers at ports. If import restrictions are relaxed, it might result in hiking the CAD up to $5 billion in accordance with the estimates given by the IMF.
