Pakistan is not on the IMF’s August 28 agenda despite having received SLA

• Pakistan is yet to sign the letter of intent.
• Progress is being made in getting approval: Aurangzeb.
• Pakistan and the IMF reached an agreement on staff levels in July.

ISLAMABAD: Pakistan is yet to identify an external financing gap of $3 billion to $5 billion despite five weeks of reaching a staff-level agreement with the country under the new Extended Funding Facility (EFF) bailout package.

As a result, Pakistan has so far been unable to sign a letter of intent (LoI) to formally request the IMF’s executive board to approve $7 billion under the EFF program.

Finance Minister Muhammad Aurangzeb and State Bank of Pakistan (BSP) Governor will sign a letter of intent on behalf of the government and will submit a letter of commitment to the IMF Executive Board while seeking its approval for $7 billion under the 37-month EFF program.

External financing has once again become a major hurdle for Pakistan to get a new round of bailout package from the IMF. The IMF has released a schedule of agenda items for its executive board and Pakistan is not included in the list of countries that the IMF board will consider approving loans before August 28, 2024.

The clerk contacted Aurangzeb to inquire about the status of the signing of the letter of intent and the IMF executive board’s consideration of approving Pakistan’s request for a $7 billion aid package. “We have made good progress towards getting the board’s approval in September,” he said in a brief reply.

Pakistan and the IMF have reached a staff-level agreement on July 12, 2024, and it is hoped that Islamabad’s request will be considered and approved by the IMF’s executive board within four to six weeks.

When the two sides reached an agreement on staffing levels, the IMF statement made it clear that “the agreement is subject to the approval of the IMF’s Executive Board and the timely confirmation of the necessary financing guarantees by Pakistan’s development and bilateral partners.”

Pakistan will have to repay $26.2 billion in external debt in 2024-25, of which $12.3 billion in deposits will be rolled over.

The government’s message to the IMF was that foreign deposits would be deferred for one year. The government wanted a three-year deferral, but countries such as Saudi Arabia, China and the United Arab Emirates (UAE) committed to a one-year deferral.

Originally published on news