Saudi Arabia, the United Arab Emirates, and Qatar pledged to contribute $4 billion to fill a gap in foreign reserves noted by the International Monetary Fund, according to Pakistani Finance Minister Miftah Ismail, who also announced that the government was lifting its ban on the import of luxury goods.
IMF’s executive board will meet on August 29 to discuss Pakistan’s $6 billion loan package, the organization said on Wednesday. The Fund said last month that it has reached a staff level agreement with Pakistan, clearing the path for a $1.17 billion transfer. The board is also thinking about increasing the 2019 program by $1 billion.
To resume the loan facility, the IMF found a $4 billion shortfall in Pakistan’s foreign reserves that needed to be filled.
According to Ismail, all previous obligations had been satisfied before to the scheduled IMF executive board meeting. “The funding of $4 billion has been obtained through our friends countries Saudi Arabia, the United Arab Emirates, and Qatar,” he informed reporters.
The South Asian country is experiencing a balance of payment crisis as a result of diminishing reserves, a growing current account deficit, and the depreciation of the Pakistani rupee against the US dollar.
Ismail has previously stated that the nation might have reached default if not for the IMF agreement, which should open up other channels for external financing.
Ismail stated, “On the direction of the Fund, I am announcing to lift the ban imposed on the luxury or non-essential commodities. We have met all the preceding conditions of the Fund.”
Ismail stated that higher import duties would now be applied and that the lifting of the ban, which was announced in May, was done to comply with World Trade Organization (WTO) requirements on the directives of the IMF.
Ismail stated, “We will apply regulatory taxes between 400% and 600% on the import of Complete Build Units of vehicles and mobile phones,” adding that the additional duties would result in an increase in the cost of imported vehicles from Rs60 million to Rs400 million.
According to the finance minister, the importation of food would take precedence over expensive cars because the country’s resources were limited.
Ismail declared, “With my limited resources, I will prioritize flour, wheat, cotton, and edible oil over iPhones and pricey cars.”