Islamabad June 6 2023: Pakistan has lined up $4 billion in external funding out of a By billion target as part of its efforts to revive a long-delayed bailout program with the International Monetary Fund.
The South Asian nation is continuing its efforts to mobilize the remaining amount, the Ministry of Finance in Islamabad said Monday in an emailed response to questions from Bloomberg News, adding that it hopes to secure a deal with the lender before it unveils its budget on June 9. “Pakistan remains committed to completing the IMF program and has already demonstrated its seriousness.” The nation has seen prolonged discussions and months of delays to revive its $6.7 billion bailout Program. The nation faces about $22 billion of external debt payments for fiscal year 2024, which begins in July, according to Columbia Threadneedle Investments. That level is about five times its reserves.
To meet IMF demands, authorities have raised taxes, hiked energy prices and let the rupee weaken. The economic crisis comes as the country is also facing political stress, with former premier Imran Khan and his supporters clashing with the powerful army, a traditional power base in Pakistan.
The external funds, along with the resumption of the IMF loan, will be crucial to overcome a dollar crunch, ease supply shortages, and pull the $350 billion economy out of default risks ahead of elections expected later this year. Pakistan’s foreign exchange reserves stand at $4.1 billion, covering just about one month of imports, below the three-month ratio considered the minimum healthy level. The IMF is working with the country on the “proper market functioning” of its currency before it resumes the loan program that ends in June, Esther Perez Ruiz, the IMF’s resident representative for Pakistan, said in an email Monday. The engagement also focuses on the passage of a national budget consistent with program goals and adequate financing, the fund said.
