Pakistan moved a step closer to securing its loan from the International Monetary Fund bailout after Saudi Arabia assured the global lender it will provide a $2 billion loan to help the nation avoid a default.
(Bloomberg) — Pakistan moved a step closer to securing its loan from the International Monetary Fund bailout after Saudi Arabia assured the global lender it will provide a $2 billion loan to help the nation avoid a default.Â
The IMF has indicated it has received the assurance from Riyadh, Pakistan’s junior finance minister Aisha Ghaus Pasha told reporters in Islamabad. The agreement with the IMF still rests on a similar commitment from the United Arab Emirates for a $1 billion loan, she said.
The South Asian nation is going through one of its biggest economic crisis in history as it raised interest rates to an all-time high this week after consumer prices quickened to a fresh record. World Bank cut its growth forecast for the nation to 0.4% from 2% estimate earlier as the nation faces a dollar shortage, leading to supply chain disruptions and companies stopping production.Â
The fund is also assessing the nation’s proposed fuel discount that it plans for lower income groups by raising fuel prices for wealthy motorists, she said and added the lender was asking for so many details on the plan.
The IMF did not immediately respond to a request for a comment.
Pakistan’s inflation quickened in March after authorities raised taxes and energy prices and allowed the currency to depreciate to meet the IMF conditions. The nation has missed multiple deadlines in past to revive the IMF’s $6.5 billion program prompting the Moody’s Investors Service to downgrade the nation to its lowest rating last month.
In January, Saudi Arabia indicated it was exploring ways to increase the kingdom’s assistance to Pakistan to $5 billion from $3 billion.
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