Pakistan expects to secure $4 billion in funding from friendly nations

(Bloomberg) – Pakistan expects to receive around $4 billion in external financing from friendly countries after July, following an agreement with the International Monetary Fund on reviving its bailout package.

Pakistan will receive the funds in the form of loans, cash deposits, equity investments and deferred payment oil supply, Finance Minister Miftah Ismail said at a press conference in Islamabad.

The nation will get $1.2 billion in financing against a friendly country’s deferred oil payment facility, and a $1.5-2 billion investment in another country’s equity. Pakistan is also expecting cash deposit and financing against the Gas Deferred Payment Facility.

The Asian Development Bank and the World Bank will also provide around $6 billion in financing during the fiscal year that started in July, he said.

The IMF this week reached an agreement with Pakistan to restart a financing program after reviewing the country’s economic strategy which was facing a potential default due to the rising current account deficit and rising inflation and rapid depletion of foreign exchange reserves.

The deal and the reduction in imports to around $6.5 billion in July will ease pressure on the rupiah, Ismail said. “We have now avoided a potential default,” he said. Pakistan has pledged to raise 850 billion rupees in the current financial year through fuel taxes, Ismail said.

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Michael J. Birnbaum