Pakistan needs $3-4b to stabilise economy

ISLAMABAD (Agencies) - Pakistan needs a capital infusion of $3-$4 billion ‘up front’ to stabilise its economy and bolster rapidly dwindling foreign currency reserves, said an economist serving on the Prime Minister’s economic advisory council, Khaleej Times reported.

Sakib Sherani said Pakistan faces a total financing gap of $7 billion to cover a projected current account deficit of $14 billion for the fiscal year ending June 20, 2009, but not all the funds were needed immediately.

“Up front we need at least 3 to 4 billion dollars to stablise the economy,” said Sherani, who is chief economist at Royal Bank of Scotland in Islamabad.

He described the projected financing gap for the current account as a “ballpark figure”, that took into account already expected financing, and foreign direct investment and portfolio flows. “The financing gap could be higher or lower, depending on how world oil prices go and what happens to imports.”