The United Arab Emirates has reportedly pledged a $1bn loan to cash-strapped Pakistan. It has also agreed to roll over an existing loan of $2bn in a boost to the South Asian nation grappling with an economic crisis, the Pakistan prime minister’s office announced today.
The announcement came after Pakistani Prime Minister Shehbaz Sharif held talks with UAE President Sheikh Mohamed bin Zayed Al Nahyan in the capital Abu Dhabi on Thursday on his third visit to the Gulf country after taking office last April.The two leaders “agreed to deepen the investment cooperation, stimulate partnerships and enable investment integration opportunities between the two countries,” a PMO statement said.
Sharif has been struggling to put the economy on track since taking office, with his first finance minister Miftah Ismail resigning abruptly last September, the agencies said Islamabad is seeking financial aid from its close allies such as Saudi Arabia and China, whereas the UAE as it negotiates for the next tranche of loans from the International Monetary Fund (IMF).
‘Precarious economy’ (by AlJazeera)
Ammar Habib Khan, an Islamabad-based economist, said that the additional funding would provide timely support to Pakistan’s precarious economy.On Wednesday, the World Bank slashed the gross domestic product (GDP) growth projections to 2 percent. The dire economic situation has forced the government to resort to extreme steps, such as closing malls and restaurants early.
Pakistan has struggled to convince the IMF to release the next tranche of $1.1bn loans, which has been pending since September on account of deadlock between the two parties.Saudi Arabia deposited $3bn in Pakistan Central Bank in October and there are reports that Saudi Crown Prince Mohammed bin Salman has asked Saudi Fund for Development to look into increasing the deposit by another $2bn.
‘No option but to accept the IMF programme’
Sayeed, who works for the research firm Collective for Social Science Research, said that Pakistan does not have many choices left and has no options but to accept the IMF programme.
Pakistan must make more than $20bn payments in debt obligation in the next 12 months, according to the central bank’s data. A deal with IMF may help unlock more bilateral assistance.