‘Positive response’ from China, Middle East over funding needs for IMF approval, says finance minister

Finance Minister Muhammad Aurangzeb said on Friday that the reaction from China, Saudi Arabia and the United Arab Emirates has been “positive” regarding Pakistan’s gross financing needs for approval of its $7 billion International Monetary Fund (IMF) programme.

The government and the IMF agreed on the 37-month loan programme in July which, according to the fund, was subject to approval from its executive board and obtaining “timely confirmation of necessary financing assurances from Pakistan’s development and bilateral partners”.

The government is in talks with Saudi Arabia, the UAE and China to meet gross financing needs under the IMF programme, Aurangzeb had said in July following a trip to China to seek energy sector debt reprofiling. Earlier this week, Aurangzeb said that the government was making good progress with the fund and hoped to get board approval in September for the new $7bn loan programme.

Talking to reporters today, the finance minister said he held positive discussions with commercial banks regarding the supply of funds. He added that their response was positive due to the improvements in the country’s ratings by international agencies.

“Discussions are ongoing with Dubai Islamic and Al-Mashreq Bank. The discussion with the Saudi finance minister last week was also positive. The reaction of China, Saudi Arabia and the UAE is positive,” he said, adding that the friendly countries would take the IMF into confidence through their executive directors.

Aurangzeb said the country needed external financing of $3bn in the 37 months of the IMF programme with $2bn for this year alone.

Rollovers or disbursements on loans from Pakistan’s long-time allies, in addition to financing from the IMF, have helped the country meet its external financing needs in the past.

Addressing the delay in the package approval by the IMF board, Aurangzeb said people were saying that the IMF would not approve the programme during the time of the stand-by agreement and the same was the case at the moment.

However, he asserted that “as in the past, this time also the IMF board will approve the programme,” adding that he hoped the package would be approved next month.

While speaking on tax collection, Aurangzeb said the government was determined to collect tax from traders and provide businesses with facilities using the amount collected.

He said that all stakeholders were taken into confidence regarding the move to collect tax from traders.