According to the State Bank of Pakistan (SBP) and the Ministry of Finance, the ongoing International Monetary Fund (IMF) programme will more than adequately cover Pakistan’s gross financial needs for the current fiscal year while also providing an additional $4 billion buffer.
According to a joint statement released on Sunday, the nation’s finance requirements are due to a $10 billion current account deficit and approximately $24 billion in foreign debt repayments.
Pakistan’s financial needs
“It is vital for Pakistan to be slightly overfinanced relative to these needs,” it stated. “This will strengthen Pakistan’s foreign exchange reserves position.” As a result, in addition to the $1.2 billion tranche that the IMF is anticipated to issue in the upcoming weeks, finance commitments totaling $4 billion were being secured through a variety of channels, including friendly nations.
“Policy lapses have caused the next review of the IMF programme to take longer than expected, which has contributed significantly to the scarcity of inflows. While this has been happening, debt servicing on foreign borrowing has persisted because these obligations have been maturing during this time.
On the other hand, the statement noted that the exchange rate had been significantly under pressure, particularly since mid-June, as a result of general USD tightening, an increase in the current account deficit, a decline in reserves, and worsening sentiment as a result of the delay in the IMF agreement and domestic politics.financial
