Prime Minister Shehbaz Sharif announced on Tuesday that the United Arab Emirates (UAE) had agreed to extend the $2 billion payment owed by Pakistan this month.
Securing external financing has previously been a key condition for the International Monetary Fund (IMF) to approve the $7 billion bailout deal for Pakistan.
Last year, friendly countries such as China, the United Arab Emirates and Saudi Arabia helped the country successfully achieve the IMF program by providing timely confirmation of the necessary financial guarantees, with the disbursement of IMF funds linked to confirmation of the refinancing of the debt of these countries.
While speaking to cabinet members today, the prime minister said he met UAE President Sheikh Mohammed bin Zayed Al Nahyan while he was on a personal visit to Pakistan on Sunday.
“In a one-on-one meeting, he said… there is a $2 billion refund pending and we are going to extend it,” the prime minister said.
“I asked the UAE to invest a few billion dollars in key investment projects and that would be helpful.
“He (Nahyan) said that the UAE was committed to this investment and that the two countries share ties of brotherhood,” the prime minister added.
“We have to go to the IMF to consult electricity prices”
Prime Minister Shehbaz also said that the government will have to approach the IMF to reduce electricity prices in the country.
Under the $7 billion Expanded Fund Facility (EFF) signed in September last year, the global lender has asked Pakistan to impose a substantial tax on gas supply to industrial captive power plants (CPPs) to eliminate any cost-benefit between grid energy and its internal electricity generation.
The country has to meet one of the main structural benchmarks that required gas disconnections to CPPs before the end of January 2025 to be eligible for disbursement of the second of seven $1 billion tranches in March. The two sides will meet for the first biannual review in the second half of February.
The prime minister said the government will have to move forward because our domestic economic plan, the National Economic Transformation Plan 2024-29, had already been started.
“That is why I am calling a meeting, because until electricity prices are reduced, our industry, our exports and our trade cannot be successful,” he said.
The prime minister added that last week the government held a meeting to discuss electricity price reductions (taking into account provinces and their allies) and had finalized “two or three options”.
“We will have a comprehensive meeting to carry out those options so that our growth is possible,” he said. “For that we will have to go to the IMF.”