Two days after reaching an agreement with the lender, Pakistan’s finance minister announced that the nation is set to receive $4 billion this month from friendly nations to close a deficit in its foreign reserves that the International Monetary Fund (IMF) had highlighted.
A staff level agreement between the IMF and Pakistan would allow for the transfer of $1.17 billion. The board is also thinking about increasing a $6 billion program approved in 2019 by $1 billion.
The minister, Miftah Ismail, stated during a press conference in Islamabad that the lack of foreign reserves is estimated to be $4 billion.
God willing, we shall close this deficit in the month of July. “We think that we will get $1.2 billion in deferred oil payment from a friendly country. We think that a foreign country will invest between $1.5 to $2 billion in stocks on a G2G (government-to-government) basis, and another friendly country will perhaps give us gas on deferred payment and another friendly country will make some deposits.”
The South Asian country is experiencing a balance of payment crisis as a result of declining reserves, a growing current account deficit, and the devaluation of the Pakistani rupee versus the US dollar.
Ismail claimed that without the IMF agreement, which should open up additional channels for foreign financing, the nation may have entered default.
He said that in FY2022–2023, the nation will also get about $6 billion from the World Bank and the Asian Development Bank.
In 2019, Pakistan was granted a $6 billion IMF program, but so far, less than half of that sum has been paid out.
In order to combat inflation, which reached 21.3 percent in June, Pakistan’s central bank increased its benchmark interest rate to 15 percent.
To read our blog on “Fuel prices will be reduced by the government today: Miftah Ismail,” click here.
