Pakistan is getting closer to an IMF bailout, but it could still be delayed.

Pakistan is getting closer to an IMF bailout, but it could still be delayed.

Notwithstanding the government's plan to offer motorcyclists Rs. 150 billion packages of cheap gasoline, 

Pakistan has managed to convince the International Monetary Fund (IMF) to lower its external extra loan requirement to $6 billion.

A  Rs.150 billion annual subsidy of Rs. 25 to Rs. 50 per liter is planned to be recovered from car owners in order to avoid an IMF objection. 

Express Tribune said that the IMF is still delaying the announcement of a staff-level agreement till it is confident that the neighboring nations will save Pakistan.

Pakistan and the IMF came to an agreement last week over the issue of the lack of external financing. 

According to a source, "all sides have now concurred to cut the IMF's prior projections of a $7 billion external financing gap to $6 billion. Therefore, the $1 billion decrease in financing requirements implies a $1 billion decrease in the demand for new loans.

Despite closing the fiscal deficit by $1 billion, Pakistan's issues have not yet been fixed. For another $6 billion in loans, it still needs guarantees from bilateral creditors, or it runs the danger of delaying the IMF SLA.

According to Pakistan, Saudi Arabia and the United Arab Emirates (UAE) have pledged $2 billion in assurances, leaving a $3 billion deficit. On Monday, 

Qatar's finance minister was contacted by Ishaq Dar, Qatar's finance minister, to request help from his nation in filling the funding deficit.

China, Qatar, Saudi Arabia, and the UAE directors told the IMF board that they would contribute $4 billion in additional funding in August of last year. This, however, did not take place.

In light of the fact that neither party has reached a staff-level agreement, the finance ministry is asking the IMF to consider the country's case for board approval on March 24.

Furthermore, the PM's pro-poor proposal to grant motorcycle riders and rickshaw drivers an Rs. 150 billion gasoline subsidy looks to be a risky gambit with the IMF's requirements.

If the government moves forward with its plan to raise gas prices for drivers, it might run afoul of the law or lead to yet another IMF split.

Pakistan has so far increased the cost of fuel, power, and other commodities while devaluing its currency and raising interest rates to a record high of 20%. 

There could be another rate hike because the issue of interest rate increases has not been fully handled. On April 4, the Monetary Policy Committee will meet again.