Saudi Arabia commits financial support to help Pakistan secure IMF deal: minister

Islamabad is also in talks with UAE to secure an assurance for a foreign reserves deposits, says Aisha Pasha

ISLAMABAD:

Saudi Arabia has conveyed to International Monetary Fund its commitment to provide financing to Pakistan, State Minister for Finance Aisha Ghaus Pasha said on Thursday, a critical support to secure IMF funding.

Saudi Arabia's $2 billion pledged in external financing support to Pakistan is one of the final conditions for an IMF deal that Islamabad needs to avert a default.

"Apparently Saudi Arabia has committed to IMF, and IMF has indicated to us that there has been a correspondence from them," Pasha told reporters in Islamabad.

The IMF's resident representative did not immediately respond to a Reuters request for a comment.

The IMF has asked Pakistan to secure assurances on external financing from friendly countries and multilateral partners to fund its balance of payment gap for this fiscal year, which ends in June.

Also read: Pakistan gets Saudis’ ‘green signal' for $2b funding

Islamabad has been hosting an IMF mission since early February to negotiate a series of policy measures to secure $1.1 billion funding for the cash-strapped economy, which is on the verge of collapse.

The funds are part of a $6.5 billion bailout package the IMF approved in 2019, which analysts say is critical for Pakistan to avert defaulting on external payment obligations.

The deal will also unlock other bilateral and multilateral financing avenues for Pakistan to shore up its foreign exchange reserves, which have fallen to four weeks’ worth of import cover, and help it steer out of a balance of payment crisis.

Pasha said Islamabad was also in talks with UAE to secure an assurance for a foreign exchange reserves deposits in central bank.