IMF demands commitments from friendly nations to fund Pakistan before approving bailout deal
March 17, 2023
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March 17, 2023 (MLN): Pakistan's efforts to secure a $5.6 billion bailout program from the International Monetary Fund (IMF) have been delayed, as the multilateral lender is reportedly seeking assurances that friendly countries will follow through on their commitments to provide funding to the cash-strapped country.
According to Pakistan Finance Minister Ishaq Dar, certain countries had pledged to support Pakistan during the IMF's review, but the lender is now asking them to fulfill those commitments before signing off on the bailout program. This has led to a delay in concluding talks with the IMF, which had been expected to conclude in a few days.
Pakistan has been racing against time to avoid default, with the country needing to repay around $3 billion of debt by June and another $4 billion expected to be rolled over.
The funds from the IMF would provide an economic lifeline for Pakistan and open up access to other financing avenues for the country, which has reserved for only a few weeks of imports and a weak currency, as Bloomberg reported.
While Pakistani officials had previously guided an IMF agreement in the coming days, the country has failed to meet multiple deadlines in the past. The delay in securing the bailout program has put further pressure on Pakistan's economy, which has been struggling with high inflation, rising debt, and a widening current account deficit.
Despite the challenges, there are signs of optimism in the country's financial markets.
Pakistan's dollar bonds due in 2031 rose 0.2 cents on the dollar on Friday, snapping seven days of losses. Investors are hopeful that a deal with the IMF will be reached soon, providing much-needed stability.