This week, it is probable that the UAE will provide financial support of $1 billion to Pakistan.

According to sources reported by local news, Pakistan may receive $1 billion in financial aid from the United Arab Emirates (UAE) this week. The IMF has requested Pakistan to secure guarantees on external finance from allies and multilateral partners to close its balance of payment gap for the current fiscal year ending in June. To avoid default, Pakistan requires an IMF deal and Saudi Arabia pledged $2 billion in financing last week. However, the IMF’s agreement with Pakistan depends on the UAE providing a similar pledge of $1 billion in loans.

The UAE is expected to provide a written guarantee for the loan, and the finance secretary will inform Fund officials of the development at the spring conference in Washington. The country is in the midst of one of its worst economic crises as interest rates reach an all-time high, causing supply chain delays and production shutdowns. The IMF has reduced its growth forecast to 0.5% from an earlier estimate of 2%. Islamabad has been hosting an IMF mission since late January, negotiating several policy changes to secure $1.1 billion in aid for the struggling economy.

The bailout package of $6.5 billion that the IMF authorized in 2019 is critical for Pakistan to avoid defaulting on its external payments. The agreement would also enable additional bilateral and multilateral funding options to help Pakistan stabilise its foreign exchange reserves, which have decreased to only four weeks’ worth of import coverage and prevent a balance of payment crisis. The Ministry of Finance sources confirmed that agreements had been reached with the UAE and the IMF would be informed as soon as Pakistan received a written guarantee from the Gulf nation.

Leave a Reply

Your email address will not be published.