ISLAMABAD: The World Bank has linked approval of seocnd RISE-II (Resilient Institution for Sustainable Economy) loan with the completetion of the stalled International Monetary Fund (IMF) programme, denting Pakistan’s efforts for securing dollar loans from multilateral creditors.
The World Bank’s RISE-II programme envisages loans worth $450 million.
The Asian Infrastructure Investment Bank (AIIB) would also provide co-financing of $250 million, so in totality, Pakistan is eyeing to secure $700 million in programme loans during the ongoing fiscal year 2022-23.
However, the approval of the second RISE programme has been linked with macroeconomic stability and the completion of the pending IMF review.
The revival of the IMF programme has so far proved a hard nut to crack, as both sides are engaged in talks since February but the staff-level agreement could not be realised.
Almost three months have passed but the staff-level agreement is yet to be reached mainly because the gross external financing gap could not be fulfilled up to the satisfaction of the Fund.
When Pakistan and the IMF concluded in-person talks on February 9, the IMF estimated that Pakistan required gross external financing of $7 billion for the ongoing financial year.
Keeping in view the improvement in the current account deficit which ultimately turned into a surplus of $654 million for the last month, the IMF slashed the requirement of external financing needs to $6 billion and finally to the level of $5 billion.
Out of $5 billion in external financing needs, Pakistan secured confirmation on the financing of $2 billion from Saudi Arabia and $1 billion from the United Arab Emirates. However, formal agreements have not been done so far.
The Pakistani authorities, however, claimed that a formal agreement with Saudi Arabia has been exchanged and it would be done.
Now the remaining $2 billion in external financing remain unfulfilled. The Pakistani authorities argued that the World Bank and AIIB were expected to disburse $700 million in programme loans within the period of the ongoing financial year.
