Saudi Arabia Deposits $2 Billion to IMF, Confirms Official

The International Monetary Fund (IMF) has informed Pakistan that it has received confirmation from Saudi Arabia of $2 billion in fresh deposits, reigniting hopes for an early signing of the agreement.

Islamabad and the IMF were in conversation at the end of January about disbursing $1.1 billion from a $6.5 billion bailout package agreed upon in 2019. To release the money, the government reduced subsidies, lifted a fictitious exchange rate ceiling, raised taxes, and raised fuel prices.

Despite this, the agreement has been delayed due to promises of additional money from friendly nations. According to sources who verified it on Wednesday, the lender had informed the Pakistani government of the change. The Fund personnel appeared to be generally pleased with the most recent confirmation.

The Saudi government, according to the source, is now poised to make a public announcement, perhaps during Prime Minister Shehbaz Sharif's anticipated visit. In a recent interview, the Saudi envoy to Pakistan hinted that there would soon be happy news to share, noting that his country has always supported Pakistan in trying times.

Now that a further $1 billion deposit has been made, all eyes are on the UAE to validate it. If they do, it may pave the way for talks with the IMF about a SLA. In order to discuss the release of funds, Finance Minister Ishaq Dar is scheduled to stop in the UAE on his way to the US.

The Ministry of Petroleum announced an unforeseen cross-fuel subsidy for owners of motorbikes and cars up to 800cc, which needed to be canceled at this point, in agreement with the PM Office. This unexpected cross-fuel subsidy was another roadblock to signing the SLA with the IMF.

The proposed cross-fuel subsidy, which cannot be implemented in a hasty way, hasn't yet been withdrawn, the sources claim.

Prior to Shaukat Tarin's tenure as finance minister, and even when Miftah Ismail oversaw the Ministry of Finance during the PDM-led government, similar plans were taken into account.

Even Miftah Ismail set aside Rs 48 billion for Sasta Petrol on the eve of the previous budget, but it was unable to be implemented because such plans could not be adequately created.

The IMF used the introduction of a half-baked cross-fuel subsidy as a justification for postponing the signature of the SLA since they were still seeking clarification on how the program would be executed in a transparent manner.