Seeking IMF Loan, Pakistan has Formally Requested a Billion Dollar External Trade Loan

 

ISLAMABAD (EWN) Pakistan has formally requested Standard Chartered Bank to refinance a commercial loan ranging from $80 million to $1 billion to close its financing gap, which is required to obtain approval from the IMF's executive board. High government sources have said that the bank has expressed its willingness to restore the line of credit for Pakistan on the request of Pakistan in principle. to restore the Saudi oil facility and as soon as it is confirmed by Saudi Arabia, the Pakistani authorities intend to sign a letter of intent from the Executive Board of the IMF and send it to the Executive Board of the IMF so that 7 billion Program loans can be obtained through the Expanded Fund Facility of Dollars.

However, it remains to be seen how the government will convince commercial banks to provide commercial loans at double digit (less than 10) rates. In view of the possibility of lowering the policy rate in the US Federal Reserve Market, the Pakistani authorities want to bring the commercial financing to a single digit rate, which is between 9 and 905 percent. For commercial loans, the government will also have to apply for an exemption from the PPP rules. Pakistan is trying to get a $12 billion loan rollover from Saudi Arabia, China and the United Arab Emirates over a year. Pakistan also wants refinancing of 4 billion dollars from Chinese commercial banks. The rollover of deposits and demands for refinancing assurances from commercial banks are preconditions for a $7 billion bailout package from the IMF's executive board. Pakistan and the IMF signed a staff-level agreement on July 12, 2024, but the IMF's executive board has so far not included consideration of Islamabad's request in its September 13 calendar for consideration.

According to the press release of the Ministry of Finance, Finance Minister Senator Muhammad Aurangzeb held a virtual meeting with Mr. Sunil Kaushal, Global Head Corporate and Investment Banking of Standard Chartered and discussed with him the expansion of investment opportunities in Pakistan. CEO of Standard Chartered Pakistan Mr. Rehan Sheikh, Secretary Finance and other senior officers of Finance Division were also present in this meeting. During this conversation, the Finance Minister highlighted the positive progress of Pakistan's macroeconomic indicators and expressed the government's determination to maintain economic stability.