ISLAMABAD: Pakistan has secured debt rollover agreements from China, Saudi Arabia, and the United Arab Emirates (UAE) for one year, Bloomberg reported on Tuesday.
This development comes as Pakistani Finance Minister Muhammad Aurangzeb expressed optimism about receiving approval from the International Monetary Fund (IMF) executive board for a $7 billion loan by the end of the month.
Last month, Pakistan reached a staff-level agreement with the IMF for a new $7 billion loan program to stabilize its struggling $350 billion economy. However, the country needed financial commitments from bilateral donors to finalize the IMF deal.
According to Bloomberg, Pakistan has secured rollover commitments from China, Saudi Arabia, and the UAE for its $12 billion in bilateral loans. The previous short-term $3 billion IMF program, completed in April, helped Pakistan avoid a sovereign default last year.
Finance Minister Aurangzeb expressed confidence that the staff-level agreement would be converted into board approval by the end of the month. He indicated that the rollover amounts would match those of the previous year.
Aurangzeb also mentioned that the current Pakistani government aims to bridge a $5 billion financing gap during the IMF’s three-year program and anticipates an improvement in the country’s credit rating. Fitch Ratings recently upgraded Pakistan from “CCC+” to “B-” following the staff-level agreement with the IMF.
The new IMF loan deal, spanning 37 months, focuses on enhancing fiscal and monetary policies, broadening the tax base, improving management of state-owned enterprises, boosting competition, attracting investment, and expanding social protection programs.
This agreement followed the government’s presentation of its first budget in June, which set an ambitious tax collection target. Analysts believe that this budget, which increased to approximately $68 billion from $50 billion last year, is likely to secure a long-term IMF bailout to stabilize Pakistan’s economy.
