ISLAMABAD - The newly elected government would have no option than to heavily rely on foreign borrowing as the country would need over $9 billion in next few months to improve it balance of payments situation.
The country is all set to elect the new government for next five years on Thursday. However, the new government would have to confront with different economic challenges including maintaining better foreign exchange reserves to repay previous loans. According to official data, the country would have to borrow $9 billion in remaining months of the current fiscal year including one tranche from the International Monetary Fund (IMF).
The data showed that the government had budgeted $17.619 billion from multiple financing sources for the current fiscal year including $17.384 billion loans and $234.60 million grants. However, the government received only 46.31 percent ($8.16 billion) in the period from July to December in the current financial year. The country has received $5.96 billion in budget and project financing and another $2.2 billion came in State Bank of Pakistan’s account. The inflows helped in building the country’s foreign exchange reserves, which earlier were depleting. The major financing of $3 billion came from Saudi Arabia and the United Arab Emirates (UAE). The IMF disbursed $1.2 billion.
Pakistan is continuously receiving funds from various international financial institutions after staff level agreement with the IMF in November last year. The country had received funds from IMF, World Bank, Asian Development Bank and Asian Infrastructure Investment Bank. The total liquid foreign reserves held by the country stood at $13,262.5 million. Foreign reserves held by the State Bank of Pakistan are $8,216.5 million and net foreign reserves held by commercial banks are $5,046.0 million.
It is worth mentioning here that Pakistan’s reliance on international lenders would continue in next few years as the country needs external financing of $71.88 billion in the next three years. The country would need external financing of $22.24 billion in next fiscal year 2025, $24.67 billion in 2026 and $24.924 billion in the year 2027, according to the documents released by the International Monetary Fund (IMF) recently.