New govt will have to rely on foreign loans to improve balance of payments situation

Country would have to borrow $9 billion in remaining months of current fiscal year

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.

ePaper - Nawaiwaqt