International Lender IMF demanded Pakistan to arrange more $8 billion in external financing.
This new demand of lender comes in the wake of the completion of the 9th IMF Review and the revival of a $6.5 billion dollar bailout package.
Pakistan’s economic crisis is worsening day by day as weekly inflation reaching 48 percent and foreign reserves falling to $4.4 billion with the government attempting to avoid default by reducing imports.
IMF has raised its earlier demand from $6 billion to $8 billion after thoroughly studying all the financial prospects for the upcoming May-December period, but Pakistan has refused to accept it. It argues that IMF’s current program is scheduled to expire in June, and it should not put conditions beyond the period of the program.
Moreover, the Finance Ministry has refused to share the budget draft for the upcoming fiscal year with IMF unless the the Fund merges the 10th review and provides more than $1.2 billion for the 9th review.
IMF asked Pakistan in February to arrange $6 billion in new loans in addition to the rollovers for debt repayments till June, a condition for the competition of the $1.2 billion ninth program.
Finance Minister Ishaq Dar notified the Fund this week that Pakistan had met all the conditions, with Saudi Arabia and UAE both promising $2 billion and $1 billion in new loans. Ishaq Dar argued that the additional $3 billion can only be arranged once the staff-level agreement is announced and the $1.2 billion 9th review is approved.
Earlier, IMF spokesperson Julie Kozack stated on Thursday that Pakistan needs to arrange ‘significant additional financing’ for the completion of the ninth review and the release of funds. According to reports, IMF is focusing more on preventing Pakistan from default rather than increasing foreign reserves.
Meanwhile Finance Minister Ishaq Dar denied the threat of default or whether Pakistan needs IMF to prevent it. “Pakistan will not default whether there is an IMF program or no program,” he stated.
Finance Minister Dar argued that misconceptions are being created around Pakistan’s economic situation. When he clarified an international rating agency’s comment on Pakistan’s $3.7 billion debt repayments before June, another international agency came up with a claim that Pakistan would not be able to meet its debt financing requirements.