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Pakistan moves closer to securing IMF deal as UAE likely to commit funds soon

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  • IMF likely to get written guarantee from UAE this week.
  • Matters have been finalised with UAE authorities, sources say.
  • Finance secretary will inform IMF officials about the development.

ISLAMABAD: Pakistan is moving closer to securing its loan from the International Monetary Fund (IMF) as United Arab Emirates (UAE) is likely to assure the global lender that it will provide a $1 billion financing to help the nation avoid a default by this week, Geo News reported citing sources.

The sources said that the UAE is likely to provide a written guarantee regarding $1 billion financing this week and the news will be conveyed to the Fund officials by the Finance Secretary Hamed Yaqoob Sheikh during the annual meeting currently being held in Washington.

The IMF has asked Pakistan to secure assurances on external financing from friendly countries and multilateral partners to fund its balance of payment gap for this fiscal year, which ends in June.

Last week, Saudi Arabia pledged $2 billion and informed the IMF it will provide financing to Pakistan. However, the agreement with the IMF still rests on a similar commitment from the UAE for a $1 billion loan.

Well-placed sources in the Ministry of Finance confirmed that matters have been finalised with the UAE and as as soon Pakistan receives a written guarantee from the Washington-based lender will receive confirmation.

The development comes after Prime Minister Shehbaz Sharif and Finance Minister Ishaq Dar requested the UAE officials in order to complete the prerequisites of the Fund.

The cash-strapped nation of 220 million people is going through one of its biggest economic crises in history as it raised interest rates to an all-time high after consumer prices quickened to a fresh record. 

IMF lowers growth forecast

Meanwhile, IMF has cut its growth forecast for the country to 0.5% from the 2% estimate earlier as the nation faces a dollar shortage, leading to supply chain disruptions and companies stopping production.

The Fund is also assessing the coalition government’s proposed fuel discount that it plans for lower income groups by raising fuel prices for wealthy motorists; however, the finance minister had said that IMF has been provided with all required information.

Dar — who cancelled his trip to Washington where he was scheduled to hold in-person meetings with the IMF officials on the sidelines — has time and again claimed that the staff-level agreement with the Washington-based lender would be reached soon; however, the claims have proved to be futile.

Islamabad has been hosting an IMF mission since late January to negotiate a series of policy measures to secure $1.1 billion in funding for the cash-strapped economy, which is on the verge of collapse.

The funds are part of a $6.5 billion bailout package the IMF approved in 2019, which analysts say is critical for Pakistan to avert defaulting on external payment obligations.

The deal will also unlock other bilateral and multilateral financing avenues for Pakistan to shore up its foreign exchange reserves, which have fallen to four weeks’ worth of import cover, and help it steer out of a balance of payment crisis.

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Changes in the US dollar’s value are directly correlated with variations in gold prices.

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The price of 24-karat gold in Pakistan increased by Rs1500 on Thursday, reaching Rs231,000 per tola. This was another jump in the price of gold in the country.

Dealers reported a comparable surge in the price of 10 grams of 24-karat gold, which is currently trading at Rs198,045 after rising by Rs1285. In addition, the cost of ten grams of 22-karat gold increased significantly, trading at Rs 181,541.

These fluctuations are strongly correlated with shifts in the US dollar’s value, demonstrating the tight connection between gold prices and exchange rates. This emphasizes how local gold markets are impacted by variables related to the global economy.

At Rs2,580, the price of 24-karat silver remains steady right now. The price of gold increased significantly on a global scale as well, rising by $14 to $2,214 per ounce.

It’s critical to understand that changes in the worldwide market can have a substantial impact on gold prices in Pakistan throughout the day. The gold rates that are offered are obtained from reliable sources, mostly situated in Karachi and Multan.

It is recommended that individuals seek the advice of nearby gold merchants and jewellers for the most precise and current information regarding gold prices.

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Pakistan pledged to finish building the TAPI gas pipeline.

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The minister discussed the importance of the TAPI gas pipeline project for Pakistan’s energy needs during a meeting with Turkmenistan’s ambassador to Pakistan, Atadjan Movlamov.

The Minister was congratulated by Ambassador Movlamov on taking office and his commitment to the project was noted.

Dr. Musadik Malik thanked the ambassador for his kind words, acknowledged the support, and promised to maintain the two nations’ friendship. The intergovernmental commission and working group meetings for the project this year were briefed by Atadjan Movlamov.

He invited the Minister to attend the Turkmenistan Energy Forum, which would take place in Paris the following month.

TAPI undertaking
The project is for the construction of a 1,680-kilometer pipeline with a 56-inch diameter that can carry 3.2 billion cubic feet of gas per day (bcfd) from Turkmenistan through Afghanistan and Pakistan to the border between Pakistan and India.

According to the terms of the TAPI agreement, Afghanistan would receive its portion of 0.5 billion cubic feet of gas per day, while Pakistan and India will each receive 1.325 billion cubic feet of gas per day.

In order to carry out the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project, Pakistan and Turkmenistan inked a cooperative implementation plan in Islamabad on June 4.

Prime Minister Shehbaz Sharif and a delegation from Turkmenistan, led by Minister of Energy and Water Resources Daler Juma’a, were present at the ceremony.

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The price of gold is still rising in Pakistan.

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According to the All Sindh Sarafa Jewellers Association, the cost of 10 grams of 24 karat gold grew by Rs. 86 to Rs. 196,760 from Rs. 196,674, while the cost of 10 grams of 22 carat gold jumped to Rs. 180,363 from Rs. 180,284.

The price of silver per tola and ten grams stayed at Rs. 2,211.93 and Rs. 2,580, respectively.

According to the Association, the price of gold on the global market rose by $7 to $2,200 from $.2,193.

It is important to note that Pakistani and IMF personnel have agreed at the staff level on the second and final review conducted as part of Pakistan’s Stand-By arrangement.

The International Monetary Fund (IMF) and Pakistan have reached a staff-level agreement on the second and final review of Pakistan’s stabilization program, which is supported by the IMF’s US$3 billion (SDR2,250 million) SBA Agreement. This is according to the official statement released by a team led by Nathan Porter.

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