Progress made on financing pledges from friendly countries, Senate panel told.

ISLAMABAD -- The government on Wednesday said to have achieved 'progress' in external financing from Saudi Arabia and the United Arab Emirates direly needed to reach a staff-level agreement (SLA) with International Monetary Fund (IMF) that has been in limbo since Feb 9.

The statement came from Minister of State for Finance and Revenue Dr Aisha Ghaus Pasha before a parliamentary panel on a day UAE's ambassador in Islamabad Hamad Obaid Ibrahim Salim Al-Zaabi met Finance Minister Ishaq Dar and expressed UAE's interest 'in augmenting and furthering investment in various sectors of the economy of Pakistan'.

Simultaneously, the foreign exchange association of Pakistan said billions of dollars could be diverted to the system provided unnecessary controls and documentation were eased and unofficial outflows to Afghanistan were contained.

Testifying before the Senate Standing Committee on Finance and later talking to journalists, Dr Pasha said 'there has been some progress from Saudi Arabia and UAE on external financing' - the only pending thing after the completion of technical negotiations.

Deal with IMF will be signed shortly after verification, says state minister

Pakistan and the IMF Staff Mission had completed physical talks on Feb 9 for the conclusion of the 9th review of the $7bn extended fund facility that had gone off track since September last year.

'There are some indications that something is coming very shortly and the matters with IMF are close to settlement as the Fund had been looking for commitments from the brotherly countries. There has been some progress on that,' she reiterated without elaborating but added that a trust deficit had been delaying the SLA with IMF.

Responding to a question, she said Pakistan's external financing needs were higher but support from friendly countries followed by the IMF tranche would unblock flows from other multilateral agencies and the matters would move forward towards normalcy.

The meeting presided over by Senator Saleem Mandviwalla was told by Exchange Companies Association of Pakistan Chairman Malik Bostan that unnecessary controls were the key reason for exchange rate instability. He said that if policies are revised and restrictions are relaxed keeping in view the current economic situation, rate stability could be achieved.

He said the central bank should allow deposits of up to $10,000 without verification as people diverted their resources to the black market. He said the exchange...