June 06, 2023 (MLN): Pakistan has lined up $4 billion in external funding out of a $6bn target as part of its efforts to revive a long-delayed bailout program with the International Monetary Fund (IMF).
The South Asian nation is continuing its efforts to mobilize the remaining amount, the Ministry of Finance in Islamabad said on Monday, 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 $6.7bn bailout program.
The nation faces about $22bn of external debt payments for the 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, it added.
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 $350bn economy out of default risks ahead of elections expected later this year.
Pakistan’s foreign exchange reserves stand at $4.1bn, covering just about one month of imports, below the three-month ratio considered the minimum healthy level, it added.
