Pakistan’s finance chief says government to seek Middle Eastern bank financing post-IMF bailout

Pakistani customers enter a foreign currency exchange shop in Karachi, Pakistan, on October 14, 2010. (AFP/File)

• Muhammad Aurangzeb hopes for better credit ratings post-bailout, hopes it will get easier for Pakistan to tap bond markets
• Pakistan is interested in getting a new IMF loan after successful completion of the last review under a $3 billion facility

ISLAMABAD: Pakistan’s newly elected coalition administration plans to rely on Middle Eastern commercial banks for financing in the coming months after securing a new and long-term bailout loan from the International Monetary Fund (IMF) in the coming months, confirmed the country’s new finance chief on Wednesday.
An IMF team is already visiting Pakistan to carry out a four-day review under a $3 billion, short-term loan program secured by Islamabad last summer. The country’s finance ministry says it has met all the structural benchmarks and targets set by the international lender, hoping that a successful completion of the performance evaluation will be followed by a release the remaining tranche of around $1.1 billion.
Pakistan has also expressed its interest in getting a new loan under the Extended Fund Facility (EFF), as it continues to carry out structural reforms to strengthen its debt-ridden economy.
“Once we conclude the Extended Fund Facility, we should be able to approach Middle Eastern banks, which have ended their whole business and appetite, for commercial borrowing and we will be able to get funding and support from them primarily to help us with our trade business etc.,” said finance minister Muhammad Aurangzeb during an interview with Pakistan’s Geo TV.
He also hoped that Pakistan’s credit ratings would improve in the coming days after it gets the EFF from the IMF, making it more convenient for it to generate money from the bond market as well.
Pakistan has been financially assisted by countries like Saudi Arabia and the United Arab Emirates in the past that deposited significant sums of money in its central bank and agreed to multiple rollovers.
They also provided Pakistan oil on deferred payment facilities and offered direct financial support to help stabilize its economy and shore up its foreign exchange reserves.