Later this week, according to IMF and diplomatic sources, the International Monetary Fund (IMF) is expected to begin the process of disbursing the seventh and eighth tranche of a $6 billion loan package for Pakistan.
The IMF’s summer recess ends on Aug 12. “So, technically the IMF Executive Board’s meeting could take place before Aug 20, if recommendations are sent to the board by Aug 6,” one of the sources said.
In 2019 Pakistan saw the signing of the $6 billion bailout agreement with IMF known as the Extended Fund Facility (EFF).
A $1.7 billion (seventh and eighth) tranche, however, has been delayed after the IMF voiced concerns about Pakistan’s adherence to the agreement earlier this year.
The most recent executive board meeting took place on February 2nd of this year. The combined seventh and eighth reviews for the EFF were the subject of a staff-level agreement by the IMF on July 13. The board must still approve the agreement before the EFF can be paid out.
According to the sources, Pakistan attempted to get the board’s permission before the summer break (Aug. 1–12) and dispatched many representatives to Washington, D.C., to convince the Fund to do so.
Army Chief Gen. Qamar Bajwa called US Deputy Secretary of State Wendy Sherman earlier this week to ask for Washington’s support for the proposal.
“But the Pakistanis were informed that it’s not possible to hold a board meeting before the recess as a number of members are already on leave,” one of the sources said.
Although “there has been no delay on their behalf,” according to a different source, the IMF was “eager to help Pakistan out,” but it was “impossible to hasten the procedure.”
According to the sources, the IMF had requested Pakistan to obtain guarantees from Saudi Arabia and the UAE that they would provide the country with an anticipated $4 billion loan once the IMF delivers its tranche.
“The Pakistanis received, and conveyed, the assurance from the two friendly countries,” a senior diplomatic source said. “So, we see no problem in the board’s approval.”
But other sources said Pakistan had been warned “not to allow the political situation to go out of hand”. The government had further been told that “street violence and protests by the opposition or a government crackdown on PTI leaders can have a negative impact on the deal”.
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