ISLAMABAD: Pakistan is likely to get $4 billion from friendly countries this month to bridge a gap in foreign reserves highlighted by the International Monetary Fund, Finance Minister Miftah Ismail said, two days after sealing a deal with the lender.
The IMF will reach a staff-level agreement with Pakistan on Thursday, paving the way for $ 1.18 billion in spending. The Board is also considering adding $ 1 billion to the $ 6 billion program agreed upon in 2019.
“As per the IMF, there is a $4bn gap,” Mr Ismail told a news conference in Islamabad, referring to the shortfall in foreign reserves.
“We will, God willing, fill this gap in the month of July,” he said. “We think that we will get $1.2bn in deferred oil payment from a friendly country. We think that a foreign country will invest between $1.5bn to $2bn in stocks on a G2G (government-to-government) basis, and another friendly country will perhaps give us gas on deferred payment and yet another friendly country will make some deposits.”
Miftah expects $3.5bn from ADB,
$2.5bn from World Bank and $400-
500m from AIIB in current fiscal year
The balance of payments crisis is facing due to the depletion of reserves, the expansion of the current account deficit, and the devaluation of the rupee against the dollar.
According to Ismail, the country could have been heading for default without the IMF Agreement, which was supposed to pave the way for external funding.
He also said the country will receive about $ 6 billion from multilateral lenders this year. This includes $ 3.5 billion from the Asian Development Bank and $ 2.5 billion from the World Bank.
He said the Asian Infrastructure Investment Bank is expected to be between $ 400 million and $ 500 million, while the Islamic Development Bank is likely to increase its funding.
The current government had to make harsh and unpopular decisions to avoid defaults, Ismail said, on all the economic hardships the country is facing. He blamed the previous administration.
He wanted the rupee to rise against the dollar shortly after the expected IMF agreement was signed this month. He also said the government is aiming to reduce energy imports this month from $ 3.7 billion last month to $ 2.7 billion. This should also ease pressure on the local currency.
However, he emphasized that strict tax and fiscal discipline adherence is essential to getting the economy on the fastest track, achieving sustainable economic development, and achieving social prosperity.
The press conference is more likely to criticize the former PTI-led government’s “mismanagement and inadequate governance,” and said Ismail puts the country at risk of economic default.
In the first three years of the PTI government, the budget deficit reached a record high of Rs. 3.41 trillion, compared to Rs. 1.66 trillion during PML-N’s five-year tenure from 2013 to 2018.
Net debt and debt rose 78% from 23.67 rupees to 53.54 rupees in the first three years of the PTI government, he said, adding that the country had experienced historically high deficits and a free fall of rupees.
According to the new GDP, the tax rate on GDP has dropped to 9%, he added, and the PML-N government has left this ratio at 11%.
He said delays in decision-making and inadequate commitments at international credit institutions, especially the IMF, have also had disastrous consequences for the national economy and are on the verge of default.
Ismail told reporters that external debt and debt have risen from 33% to 40% and debt repayments have more than doubled from 1.5 trillion rupees to 3.14 rupees.
In the 2022-23 budget, the government has set an income collection target of Rs 7.47 tr, and non-income collection is targeting Rs 1.94 tr, adding that it exceeds that not only for meetings.
Despite the tight budget situation, he said the government increased the budget allocation to the Benagil Income Support Program from 250 rupees to 364 rupees. In response to the
the question, the minister said that in parallel with the promotion of the IT sector, interest-free loans will be provided to young people, and the government will give the university committee a scholarship for students from Barotistan for 10.9 billion rupees.
Credit/Source : https://www.dawn.com/news/1700010/eyeing-4bn-from-friendly-countries-this-month