Updated on January 13th, 2023
The International Monetary Fund (IMF) is likely to begin the process of disbursing the seventh and eighth tranches of a $6 billion loan program for Pakistan later this week.
The IMF’s summer vacation ends on August 12. “So, technically, the IMF Executive Board may meet before August 20, if recommendations are sent to the board by August 6,” one of the sources said.
Pakistan and the IMF signed a $6 billion bailout agreement — the Expanded Fund Facility (EFF) — in 2019. But the release of the $1.7 billion (seventh and eighth) tranche has been put on hold since earlier this year after the IMF raised concerns over Pakistan’s compliance.
The last meeting of the Executive Board was held on February 2 this year. On July 13, the IMF reached a staff-level agreement on the joint seventh and eighth reviews for the EFF, which must be approved by the Board before disbursement.
Sources said Pakistan tried to get the board’s approval before the summer vacation (August 1-12) and sent several officials to Washington to convince the fund to do so.
Earlier this week, Army Chief Qamar Bajwa telephoned US Deputy Secretary of State Wendy Sherman to seek Washington’s support for the package. “But the Pakistanis were informed that it is not possible to hold the board meeting before the holiday as several members are already on leave,” said a source.
Another source said the IMF was “keen to help Pakistan” and that “there was no delay on their part”, but “it was not possible to speed up the process”.
Sources say that the IMF has asked Pakistan to get assurance from Saudi Arabia and the United Arab Emirates that they will give the country an expected $4 billion loan after the tranche is released by the IMF.
“The Pakistanis have received assurances from both friendly countries and conveyed them,” a senior diplomatic source said. “So, we don’t see any problem with the board’s approval.”
But other sources say Pakistan was warned: Don’t let the political situation get out of hand. The government was further told that “violence and street protests by the opposition or a government crackdown on PTI leaders could undermine the deal”.
The US media, commenting on General Bajwa’s calls to US diplomatic and military officials three days ago, pointed out that “Pakistan’s military, which has ruled the country directly for more than half of its 75-year history, has worked together.is an official ally in the war against terrorism against the United States and al-Qaeda.
“And the calls have helped, but even the Americans can’t convince the IMF to stop its approach,” a diplomatic source said.
Pakistan is in dire need of an IMF loan. In July, the fund said it would increase the value of the bailout from $6 billion to $7 billion if its executive board approved it, which is generally considered a formality,” a report said. It was said.
Another report states that “the restoration of the IMF’s bailout package will help Pakistan and encourage other international financial institutions to establish links with the country”.
The report pointed out that since Imran Khan’s ouster, “Pakistan’s currency has fallen to an all-time low amid uncertainty over IMF assistance”.
The country’s continued depreciation has “sparked panic among its business community” and “rising food prices have made the Sharif government extremely unpopular”.