Army chief Bajwa urges US to expedite early release of IMF loan to Pakistan

Pakistan Army chief General Qamar Javed Bajwa spoke over phone with the US Deputy Secretary of State Wendy Sherman earlier this week and also appealed to the White House and the US Treasury Department to push the IMF to immediately expedite the nearly USD 1.2 billion loan.

Islamabad: Pakistan Army chief General Qamar Javed Bajwa has reached out to the US for the early disbursal of the nearly USD 1.2 billion loan from the IMF, the official media reported on Friday, as the cash-strapped country faces the ignominy of a possible debt default due to its depleting foreign exchange reserves.

Bajwa spoke over phone with the US Deputy Secretary of State Wendy Sherman earlier this week and also appealed to the White House and the US Treasury Department to push the IMF to immediately expedite the nearly USD 1.2 billion loan, state-run news agency Associated Press of Pakistan (APP) reported, quoting sources in the Pakistan Army.

The International Monetary Fund has already granted Pakistan staff-level approval for the USD 1.17 loan in question on July 13. But the transaction part of the IMF's USD 6 billion Extended Fund Facility for Pakistan would only be processed after the multilateral lender's executive board grants final approval.

The IMF is going into recess for the next three weeks and its board will not convene until late August. No date has been set for announcing the loan approval for Pakistan, the APP report said, quoting an IMF official. According to the official, there is a major difference between staff-level approval and board approval.

Our stakeholders, the countries that take the vote as to whether they are supporting this or not, make the final decision, the report said quoting the official. This is a difference. So the legally binding step is a board approval, not the staff level agreement, the official added. The Army chief's appeal comes in the wake of separate meetings between senior civilian Pakistani and American officials in July, none of which managed to negotiate an early disbursement of funds, the report said.

Several senior Pakistani officials have met with US and other key stakeholder nations in the IMF and World Bank in the past week to register concerns about the timing of IMF Executive Board decisions, pressing to expedite review of Pakistan's progress on prior actions, the report said quoting an official familiar with the proceedings.

The lack of progress in those meetings spurred Bajwa to get Washington's attention when other emissaries could not deliver, the report quoted unnamed sources as saying. Three years ago, the Pakistan government under Prime Minister Imran Khan had inked a 39-month USD 6 billion programme with the IMF. Out of this, barely 50 per cent of the amount has been disbursed so far as the country repeatedly failed to meet its targets.

The IMF programme was put on hold following Khan's ouster in April. Since 1958, Pakistan has embarked on 22 separate IMF programmes but completed just one. Higher prices of energy imports have put Pakistan on the brink of a major balance of payment crisis. Pakistan's foreign exchange reserves continued to plummet sharply due to external debt and other payments.

According to the central bank, State Bank of Pakistan's estimates, Pakistan's foreign exchange has fallen below USD 9 billion as on July 22, covering under two months of import bills. The country's current account deficit has widened to touch USD 2.3 billion for the month of June.

Meanwhile, the Pakistani rupee continued its downward slide against the US dollar, closing at a record-low at 239.94 against the greenback in the intra-bank market on Thursday. However, while officials familiar with the exchange admitted that the currency and foreign reserves situations were worrisome, they reported progress on the IMF finance facility.

If the government can get through this tough month, there are good opportunities to stabilise the economy, but August will not be easy, the APP report said, quoting sources. The restrictions on the import of completely built-up automobiles has led to the country's two leading car assemblers -- Toyota and Suzuki --- to plan partial shutdowns due to the severe paucity of raw materials.

New York-based ratings agency S&P Global on Friday revised Pakistan's long-term ratings from 'stable' to 'negative' due to higher commodity prices and tighter global financial conditions. (PTI)