ISLAMABAD - Pakistan is expecting massive inflows from multilateral and bilateral sources following the deal with the International Monetary Fund (IMF) for next loan tranche that would improve the balance of payment situation of the country.
The coalition government is currently negotiating with the IMF to revive the loan programme, which was suspended in March this year when the previous government of PTI had announced subsidy on electricity and petroleum products and tax amnesty scheme for industrialists. The revival of IMF programme would not only release around one billion dollars for Pakistan but it would also pave the way for getting loans from other multilateral and bilateral sources.
“Currently, loan from World Bank, Asian Development Bank and Asian Infrastructure Investment Bank and others are in pipeline. However, all these depend on the revival of IMF programme,” said an official of the ministry of finance.
He further said that Pakistan and IMF have not reached an agreement yet and would likely to finalize it next week. The government had so far addressed the Fund‘s reservations over the annual budget 2022-23. Both the sides are currently negotiating on electricity sector and monetary side.
According to the estimates, Pakistan is expecting $9 billion from the World Bank and $8 billion from the Asian Development Bank. It is also projected to receive $2 billion from the Asian Infrastructure Investment Bank. Similarly, the Saudi Arabia had also agreed to give extension of its $3 billion, which are deposited in State Bank of Pakistan after the due date of end of December. Pakistan is expecting to receive $5 billion from the IMF in medium term. The government is expected that IMF would accept Pakistan’s request to increase the loan volume by $2 billion to $8 billion and extend the programme by one year. The country had already received $3 billion from the Fund.
China had already helped Pakistan by giving $2.3 billion. The inflow of $2.3 billion would build the country’s foreign exchange reserves, which are depleting due to repayment against previous loans and financing of current account deficit. With the Chinese inflow, the SBP’s held reserves would increase t0 $10.537 billion. Apart from giving $2.3 billion, China has also decided to rollover its safe deposits — which were due in June-July.
Govt expects $9b from WB, $8b from ADB, $2b from AIIB while Saudi Arabia agrees to extend its $3b facility
The government would need the aforesaid loans to meet its external financing in the next fiscal year. Earlier, on June 7 this year, Finance Minister Miftah Ismail had said Pakistan would need external financing of $41 billion in the next fiscal year. Sharing details, he explained that the government would repay previous loan of $21 billion and current account deficit has projected at $12 billion and $8 billion more for increasing foreign exchange reserves to $18 billion in the upcoming financial year. He was optimistic that the government would arrange the financing.
In the annual budget 2022-23, the government has projected that Pakistan would make foreign borrowing of Rs3.166 trillion in next fiscal year to maintain foreign exchange reserves that are projected to decline mainly due to repayment of previous loans and financing of current account deficit. The government has projected foreign assistance of Rs 3.166 trillion for 2022-23 as against revised Rs3.144 trillion budgeted for the current fiscal year. The government has estimates Rs722.341 billion under the head of programme loans and Rs2.133 trillion under the head of other loans.
The coalition government is currently negotiating with the IMF to revive the loan programme, which was suspended in March this year when the previous government of PTI had announced subsidy on electricity and petroleum products and tax amnesty scheme for industrialists. The revival of IMF programme would not only release around one billion dollars for Pakistan but it would also pave the way for getting loans from other multilateral and bilateral sources.
“Currently, loan from World Bank, Asian Development Bank and Asian Infrastructure Investment Bank and others are in pipeline. However, all these depend on the revival of IMF programme,” said an official of the ministry of finance.
He further said that Pakistan and IMF have not reached an agreement yet and would likely to finalize it next week. The government had so far addressed the Fund‘s reservations over the annual budget 2022-23. Both the sides are currently negotiating on electricity sector and monetary side.
According to the estimates, Pakistan is expecting $9 billion from the World Bank and $8 billion from the Asian Development Bank. It is also projected to receive $2 billion from the Asian Infrastructure Investment Bank. Similarly, the Saudi Arabia had also agreed to give extension of its $3 billion, which are deposited in State Bank of Pakistan after the due date of end of December. Pakistan is expecting to receive $5 billion from the IMF in medium term. The government is expected that IMF would accept Pakistan’s request to increase the loan volume by $2 billion to $8 billion and extend the programme by one year. The country had already received $3 billion from the Fund.
China had already helped Pakistan by giving $2.3 billion. The inflow of $2.3 billion would build the country’s foreign exchange reserves, which are depleting due to repayment against previous loans and financing of current account deficit. With the Chinese inflow, the SBP’s held reserves would increase t0 $10.537 billion. Apart from giving $2.3 billion, China has also decided to rollover its safe deposits — which were due in June-July.
Govt expects $9b from WB, $8b from ADB, $2b from AIIB while Saudi Arabia agrees to extend its $3b facility
The government would need the aforesaid loans to meet its external financing in the next fiscal year. Earlier, on June 7 this year, Finance Minister Miftah Ismail had said Pakistan would need external financing of $41 billion in the next fiscal year. Sharing details, he explained that the government would repay previous loan of $21 billion and current account deficit has projected at $12 billion and $8 billion more for increasing foreign exchange reserves to $18 billion in the upcoming financial year. He was optimistic that the government would arrange the financing.
In the annual budget 2022-23, the government has projected that Pakistan would make foreign borrowing of Rs3.166 trillion in next fiscal year to maintain foreign exchange reserves that are projected to decline mainly due to repayment of previous loans and financing of current account deficit. The government has projected foreign assistance of Rs 3.166 trillion for 2022-23 as against revised Rs3.144 trillion budgeted for the current fiscal year. The government has estimates Rs722.341 billion under the head of programme loans and Rs2.133 trillion under the head of other loans.
