ISLAMABAD : August 12, 2022. In a latest development, Pakistan has received a letter of intent (LoI) from the International Monetary Fund (IMF), making it evident that the Washington based lender is ready to release to Pakistan its tranche of $ 1.17 billion under extended fund facility (EFF).
Pakistan would be signing LoI and sending it back to IMF for presenting it to its board of directors meeting in two weeks for grant of loan facility for Islamabad under EFF.
After sending of LoI by IMF and signing it by Pakistan government, the approval of the board of the directors of the lending agency will only a procedural formality.
IMF board is likely to meet in third week of the current week and approve much-needed loan facility for Pakistan.
The release of $ 1.17 billion by IMF is more than a loan for Pakistan as latter’s economic revival and strengthening of its local currency is linked to inflows from other than IMF .
Once IMF releases the tranche to Pakistan, Islamabad will get remaining required financial support from its friendly countries like Saudi Arabia , Qatar and United Arab Emirate (UAE). Pakistan would need minimum $10 billion to pay off its loan liabilities in the current fiscal year.
In the past, the countries like Saudi Arabia , Qatar and UAE had always been coming to Pakistan’s help when where it needed financial support, but this time these friendly countries too made a condition of prior release of IMF tranche to give Islamabad any more loans.
Pakistan is not in comfortable zone as its exports are not picking- up in recent years and at the same time its revenue generation is not increasing at a pace which it needs to pay- off external loan liabilities. Pakistan’s economic situation is worrisome for its decision makers. Now they have to take some workable direction where Pakistan could get a way out from the current financial pressures.
Pakistan is under huge financial pressure due to its rising loan liabilities. Its successive governments have relied on foreign loans to keep enjoying their rules in the recent years. Particularly, its growth rate in terms of revenue, exports and earnings from sources does not match its liabilities in terms of foreign loans.
IMF has attached hard conditions with new loans and demanded of Islamabad to change its governance style and take concrete measures to increase its income and simultaneously cut down its unnecessary expenses.
