Pakistan scores financing assurances from China, UAE, Saudi

Pakistan has secured “significant financing assurances” from China, Saudi Arabia, and the UAE in connection with its new IMF program, extending beyond the $12 billion debt rollover deal previously agreed upon, an IMF official said.

IMF Pakistan Mission Chief Nathan Porter, during a Thursday conference call, refrained from disclosing the specific amounts of the additional financing but confirmed that the support from these countries would supplement the debt rollover.

“I won’t go into the specifics, but UAE, China, and Saudi Arabia all provided significant financing assurances as part of this program,” Porter stated.

The IMF’s Executive Board approved a new $7 billion, 37-month loan agreement for Pakistan on Wednesday, aimed at reinforcing macroeconomic stability through “sound policies and reforms.” This approval includes an immediate $1 billion disbursement to Pakistan, which has previously undertaken 22 IMF bailout programs since 1958.

Porter said though Pakistan economy has seen a remarkable change, the main challenge Pakistan will face will be to continue sound monetary, fiscal, and exchange rate policy, while raising tax revenues and rationalizing public spending.

The country succeeded in making the first primary budget surplus in 20 years last year. The new IMF program aims at expanding the surplus to 2% of the GDP with a focus on enhancing tax collections from sectors that are currently under-taxed, notably retail.

The next loan review is scheduled for around March or April 2025, based on the performance criteria set for the end of 2024.

In a related development, IMF Managing Director Kristalina Georgieva described her recent meeting with Prime Minister Shehbaz Sharif as “very productive.” The discussions revolved around Pakistan’s new program, which is aimed at economic recovery, disinflation, improving tax fairness, and implementing reforms to foster job creation and inclusive growth.