Pakistan Wins Additional Financing Assurances from China and UAE, Says Saudi IMF Official

Pakistan Secures Financial Guarantees from China, UAE, and Saudi Arabia Amid IMF Loan Approval

WASHINGTON: Pakistan has received “significant financial guarantees” from China, Saudi Arabia and the United Arab Emirates, linked to a new International Monetary Fund plan, beyond a deal to roll over $12 billion in bilateral loans owed to them by Islamabad. said Thursday.

IMF Pakistan Mission Chief Nathan Porter declined to provide details of the additional financing payments made by the three countries, but said they would be debt restructuring.

“I won’t go into details, but the United Arab Emirates, China and Saudi Arabia have made significant financial guarantees that have tied into this project,” Porter told reporters on a conference call.

The International Monetary Fund’s governing body on Wednesday approved a new $7 billion, 37-month loan agreement for Pakistan, which requires “correct policies and reforms” to strengthen macroeconomic stability.

The crisis-hit South Asian country has had 22 previous IMF bailouts since 1958.
Porter said Pakistan has made a “really significant” economic turnaround since mid-2023, with inflation dropping dramatically, exchange rates stable and foreign reserves doubling. “So we’ve seen the benefits of good policy,” Porter said, adding that the challenge now is to stabilize monetary, fiscal and exchange rate policy, raise more taxes and boost public spending to generate strong and sustained growth.

Last year, Pakistan achieved its first primary budget surplus in 20 years, and the plan calls for an increase to 2% of GDP. Porter said this depends in part on reforms to improve collections from lower-taxed sectors such as retailers.

Porter said the next review of the loan will take place in March or April 2025, based on performance criteria at the end of 2024.