Pakistan secures debt rollover commitments from China, Saudi Arabia and UAE — Bloomberg

ISLAMABAD: Pakistan has secured debt rollover commitments from China, Saudi Arabia and the United Arab Emirates (UAE) for a year, Bloomberg reported on Tuesday, as the Pakistani finance minister expressed hope of getting an approval from the International Monetary Fund (IMF) executive board for a $7 billion loan dead by the end of this month.
Pakistan last month reached a staff-level agreement with the IMF for a new $7 billion loan program to keep its fragile $350 billion economy afloat.
But the South Asian nation reportedly needed financing commitments from bilateral donors to get a final nod from the IMF board for the fresh bailout.
“Pakistan has secured commitments from China, Saudi Arabia and the United Arab Emirates to roll over debt for a year,” a Bloomberg report said on Tuesday. “Pakistan has $12 billion in bilateral loans that have been extended for the past few years.”
The South Asian nation completed a short-term $3 billion IMF program in April this year, which helped Islamabad avert a sovereign default last year.
“We are quite hopeful that the staff-level agreement will be converted into a board approval by the end of the month,” Finance Minister Muhammad Aurangzeb said, while addressing an event in Islamabad on Tuesday.
Bloomberg quoted Aurangzeb as saying that the amount of rollovers would be the same as last year.
Aurangzeb expected the incumbent Pakistani government to manage a $5 billion financing gap during the IMF’s three-year program, according to Bloomberg. He believed that Pakistan was moving in the right direction with a stable currency.
Pakistan was also aiming to improve its credit rating to “B-” after Fitch Ratings last month upgraded it by one notch to “CCC+,” following a staff-level agreement with the IMF.
The IMF earlier said the new loan deal, which would span 37 months, was aimed at strengthening fiscal and monetary policy as well as reforms to broaden the tax base, improve management of state-owned enterprises, strengthen competition, secure investment, enhance human capital, and scale up social protection through increased generosity and coverage in major welfare programs.
The deal came after the government of Prime Minister Shehbaz Sharif presented its first budget in parliament in June, setting an ambitious tax collection target.
Analysts said at the time the new budget of about $68 billion, up from $50 billion in the last year, was likely to land a longer-term IMF bailout to help stabilize the economy.