The United Arab Emirates (UAE) has confirmed that it would provide a $1 billion loan to Islamabad, said Pakistan Finance Minister Ishaq Dar, on Friday (April 14), getting the cash-strapped country one step closer to receiving the long-awaited bailout tranche from the International Monetary Fund (IMF). This comes a week after Pakistan had said that Saudi Arabia had assured that it would provide a $2 billion loan after the Washington-based lender had asked Islamabad to get financing assurances before a loan can be disbursed.
Referring to the country’s central bank, Dar took to Twitter and wrote, “The State Bank of Pakistan is now engaged for needful documentation for taking the said deposit from UAE authorities.” The commitment by UAE is one of the last requirements of the IMF before it would release a tranche of $1.1 billion which is crucial for Pakistan’s acute balance of payments crisis.
Pakistan is facing soaring inflation at 35.37 per cent, the highest in over five decades, while prices of essential food items such as wheat flour, sugar, and edible oil rose significantly. This also comes nearly a week after a United States-based think tank released a report which said that Pakistan owes around $77 billion to several public and private entities in China, Saudi Arabia, and UAE.
The recent announcement makes UAE the third country after Saudi Arabia and China to have come to Pakistan’s assistance amid the country’s need for external financing to bridge the balance of payments gap for this fiscal year which ends in June. According to reports, Pakistan has less than a month’s worth of foreign exchange reserves.
As of December 2022, Islamabad also holds external debt and liabilities of $126.3 billion, at least 77 per cent of this debt, which amounts to around $97.5 billion, is directly owed by Pakistan’s government to various creditors, said a report by Washington-based think tank, United States Institute of Peace (USIP), earlier this month.
Speaking about Pakistan’s bailout, IMF managing director Kristalina Georgieva, on Thursday, said, “My hope is that with the goodwill of everyone, and the implementation of what has been already agreed by the Pakistan authorities, we can complete our current programme successfully.” She added that they are also in talks with friendly countries of Pakistan to provide financial assurances so it can complete the programme.
(With inputs from agencies)
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