Finance Minister Ishaq Dar Confirms UAE Reaffirms $1 Billion Bilateral Financial Support to Pakistan via IMF
According to a tweet by Pakistan’s finance minister Ishaq Dar, the UAE authorities have confirmed their bilateral support of $1 billion to Pakistan to help bolster its struggling economy. Dar also mentioned that the State Bank of Pakistan (SBP) is now in the process of completing the necessary documentation to receive the deposit from the UAE authorities.
The State Bank of Pakistan (SBP) would receive the third and final disbursement from the Industrial and Commercial Bank of China (ICBC) worth $300 million. This is part of the $1.3 billion loan Pakistan received from ICBC and repaid. The SBP will receive the disbursement in its account today.
On March 3, the ICBC approved a $1.3bn loan rollover for Pakistan and made the first payment of $500m on the same day, with the second payment also worth $500m made on March 17. This development is expected to facilitate the staff-level agreement (SLA) with the IMF, which has been delayed for a long time, and enable multilateral disbursements. Since early February, Pakistan has negotiated with the IMF to revive its $7bn bailout program to secure a $1.1bn tranche. As the country’s central bank reserves have fallen to critical levels, hovering around $4bn, and are only enough to cover a month of imports, the IMF tranche is vital. It will also unlock other external financing avenues, helping Pakistan avoid defaulting on its obligations. According to Ishaq Dar, the predecessor of the country’s finance minister, the UAE’s assurance to the IMF “paves the way for a staff-level agreement with the Fund.” He also added that “board approval will hopefully follow in four weeks. This will reduce our default risk and demand for dollars (for capital flight).”