Minister: Pakistan seeks $4.5 billion from creditors

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Dr Shamshad Akhtar, interim finance minister, said Pakistan anticipates raising approximately $4.5 billion in the current fiscal year (2023-24) from multilateral and bilateral sources.

According to the official flagship journal of ICMA International, the government expects to receive over $1.6 billion from these sources in the second quarter (Q2).

In her remarks, she noted that the Asian Development Bank, the World Bank, and the Asian Infrastructure Investment Bank are among the major creditors, adding that both project-based and program-based funds are being received.

According to a note released today by Fitch Ratings, Pakistan’s foreign exchange reserves have recovered due to new funding inflows and limited current account deficits, and the reserves are expected to continue to rise.

There were $12.7 billion in official gross reserves, including gold, in October (about three months’ imports), up from about $8 billion at the start of 2023, but well below the peak of $23 billion at the end of the previous year.

From a low of approximately $3 billion in January, the central bank’s net liquid forex reserves have hovered at just over $7 billion since October (about two months of imports). As a result of a decrease in imports, reserve coverage ratios improved.

Negotiations for some program loans have been completed, and disbursements are expected shortly. Currently, the country is meeting its debt obligations on schedule and intends to do so in the future as well.

About the IMF program, the minister stated that a Staff Level Agreement (SLA) had been reached following the successful conclusion of the first review of the Standby Agreement.

Pakistan will have access to SDR525 million (about $700 million) upon approval by the IMF’s Executive Board.

The minister indicated that despite domestic and global challenges during FY2023, fiscal and external sector stability has been achieved through various stabilization measures and structural reforms.

FY2023’s fiscal deficit stood at 7.7% of GDP, compared to 7.9% last year, while the current account deficit narrowed by 87.2% to $ 2.2 billion compared to $ 17.5 billion in FY2022.

It was noted that the trade deficit was contained by 38.7% in FY2023 as compared to an expansion of 36.4% in FY2022.

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