In case there’s no deal with IMF: Efforts under way to obtain $3-4bn from friendly countries

ISLAMABAD: Under the much-hyped Plan B, Pakistan is left with no option but to make a request to its bilateral partners for additional deposits of $3 billion in case no deal is struck with the International Monetary Fund (IMF) till end June 2023.

The IMF programme is scheduled to expire on June 30, 2023. Both sides, the IMF and Pakistan, had gone public despite showing their commitment to remain engaged for the completion of the 9th Review under the $6.5 billion Extended Fund Facility (EFF) programme.

If the 9th Review does not happen, the Q Block (Ministry of Finance) is contemplating all available options to secure bridge financing from bilateral friends in order to avert the looming crisis on its external accounts.

“With the provision of bridge financing of $3-$4 billion from bilateral friends, Pakistan can manage its financing needs. This arrangement is under active consideration and will be implemented in order to avoid the danger of default in the next few months till end October or November 2023,” top official sources confirmed while talking to The News here on Saturday. It may only be wishful thinking as friendly countries like Saudi Arabia and the United Arab Emirates (UAE) have linked their additional deposits of $2 billion and $1 billion respectively with the signing of Staff Level Agreement (SLA) and revival of the IMF programme.

“This arrangement is in our minds and we will request additional deposits of $3 billion from our bilateral friends and hope it will be done. If it is materialised, then it will help Islamabad pass the next few months without fear of default,” said a top official.

Meanwhile, Minister for Finance Ishaq Dar said that China would grant rollover of $1 billion and $300 million commercial loan re-financing within the ongoing month, so $2.3 billion would not deplete from the foreign exchange reserves by end June, 2023.

In his televised speech on Saturday, Ishaq Dar said that Pakistan had paid back $1 billion dollars to China Development Bank under its devised strategy and another $300 million to the Bank of China prior to their due date with the understanding that it would be re-financed as early as possible.

Both of these Chinese banks, he said, agreed not to charge anything in the shape of penalty. China had re-financed $1 billion by the China Development Bank and it was the fastest execution. Now Pakistan has also paid off $300 million in commercial loans and it was hoped that it would also be re-financed within the next four to five days. All procedures have been completed, he added.

On the SAFE deposits of $1 billion, he said, Pakistan required rollover of two deposits of $500 million each and renewal was in the order within the ongoing month. He said that Pakistan had to repay $3.7 billion as predicted by an international rating agency and all repayments would be done well on time. There would be no major reduction in the foreign exchange reserves held by the SBP till end of June 30, 2023.

On Shell Pakistan, the minister said that the company was going to sell its share to an international investor, so their business activities would not close down in the country. All employees would remain intact and no money would be remitted out from the country. He said that Shell was making plans for separation from energy, so it was their internal decision. There is nothing to worry about. This news is not new for the government, he added.