ISLAMABAD: The Islamic Development Bank (IsDB) has proposed enhanced service charges on Pakistan’s request for an additional oil financing facility. However, Islamabad made a request to grant a waiver on it.
Top officials of the Prime Minister’s Secretariat told The News on Wednesday that after striking the Staff Level Agreement with IMF, Pakistani authorities are negotiating with Islamic Development Bank for jacking up oil facility from proposed amount of $50 million to $100 million for end of December 2023. They are also discussing the possibility to reduce the level of service charges imposed on this facility. “IsDB has proposed services charges of less than 1 percent on the committed oil facility but we made a request to grant us a waiver or reduce it,” said one top official.
The services charges shared in the term sheet show that it hovers around 0.05 percent to 0.5 percent. The IsDB had already disbursed $100 million in September 2023 for oil financing and so far, indicated $50 million facility till end of December. It is yet to be seen how the request of jacking up the amount from $50 to $100 million for oil facility and waiver on service charges would be accommodated by the IsDB management and its Board expected to meet on December 11, 2023.
The IDB’s Executive Board is also set to meet next month for approving syndicate financing of $300 million.
With the signing of SLA with the IMF, all other multilateral creditors including the World Bank, Asian Infrastructure Investment Bank (AIIB) and Asian Development Bank (ADB) indicated to resume the programme loans and all these three multilateral institutions were ready to grant approval for programme loans in December 2023.
The ADB has indicated that its board is expected to hold a meeting on December 4, 2023 in Manila for considering approval of Domestic Resource Mobilization (DRM) programme loan of $350 million for Pakistan.
The WB is expected to consider approval of RISE-II on December 20, 2023 while the AIIB is going to consider approval of $250 million on December 21, 2023 just ahead of Christmas and New Year holidays.
The IMF’s Executive Board date has not yet confirmed or communicated by the IMF staff. It might be held either on December 7, 2023 or December 13 or 14, 2023. In any case, the IMF’s Executive Board is likely to grant approval of next tranche of $700 million before Christmas and New Year holidays.
If everything gets materialized, then Islamabad is expecting disbursement of $1.7 to $1.8 billion during December 2023. Out of the total gross financing requirement of $25 billion, Pakistan has so far materialized $5 billion from all multilateral and bilateral creditors in the shape of disbursements of loans and time deposits. The EXIM Bank of China also granted a rollover of $1.2 billion so far for the current fiscal year.
Pakistan has also made a fresh request to credit rating agencies to review their ratings after approval of the next tranche from the IMF next month.
