ISLAMABAD: China has rolled over $2 billion State Administration of Foreign Exchange (SAFE) deposits to Pakistan for a year, local media reported on Friday citing Finance Minister Ishaq Dar.
It was one of the requirements of the International Monetary Fund (IMF) to secure the Chinese rollover for meeting external financing needs to move towards signing a staff-level agreement with the lender.
There are nine tables under the IMF’S Memorandum of Economic and Financial Policies (MEFP) that are required to be met. One of the tables is related to the Net International Reserves (NIR) as an indicative target, which cannot be met without incorporating the external financing needs of the programme period by the end of June 2023.
The fund has asked Pakistan to bridge the gap of $6 billion in order to ensure its credibility as non-materialisation may result in Pakistan plunging into default.
Financing is also expected from Saudi Arabia and the United Arab Emirates, according to sources in the Ministry of Finance.
IMF’s demands on external financing
External financing is one of the final steps that IMF wants Pakistan to take before clearing funding that has been stalled since late last year.
The global lender has informed Islamabad that its credibility would also be at stake if the staff-level agreement is finalised and Pakistan fails to materialise its commitment from bilateral partners.
