The Government of Pakistan has signed the Letter of Intent (LoI) that it received from the International Monetary Fund (IMF) last week for the activation of the lender’s bailout program.
Officials from the Ministry of Finance told ProPakistani that the IMF dispersal to the tune of $1.17 billion is near completion, with both sides expected to finalize the deal by end-August. The agency will review all the data provided by Pakistan and will later send a final draft of the agreement after reviewing the LoI.
Sources said the Acting Governor State Bank of Pakistan (SBP), Dr. Murtaza Syed, and the Minister for Finance, Miftah Ismail, will ink the final draft.
The administration received an LoI from the IMF, which was then signed on Monday. The letter in question is imperative to reviving the loan program established under the staff level agreement (SLA) and the memorandum of economic and fiscal policies (MEFP) agreed with the lender last month.
Pakistan has submitted the letter of intent, and the IMF will now share the final text of the deal with the government.
The IMF Executive Board is expected to convene by 29 August to approve two $1.17 billion tranches and increase Pakistan’s loan wallet by at least another billion dollars. It is noteworthy that the board was summoned after friendly countries such as Saudi Arabia, the UAE, Qatar, and China confirmed to the IMF that they were ready to arrange $4 billion in bilateral financing for Pakistan, which was the final stumbling block to the bailout package after the completion of all prior actions that were agreed upon under the SLA.
In terms of backdoor developments spearheading the IMF deal, the National Assembly ordained the Inter-Governmental Commercial Transactions Bill, 2022. This regulation aims to authorize, negotiate, and supervise inter-governmental agreements between the Government of Pakistan and the government of a foreign state for the purpose of entering into business agreements.
Under this framework, Pakistan is expected to get $4 billion from friendly nations this month to close a deficit in foreign reserves identified by the IMF. The government is expected to be able to address broad parameters and mechanisms for the execution of the intended commercial transaction in an orderly fashion.