ISLAMABAD: Finance Minister Dr Shamshad Akhtar ruled out the possibility of Pakistan requesting the International Monetary Fund (IMF) to increase the timeframe or the size of the Standby Arrangement (SBA), while government high-ups to also advise on materialising the external financing gap once a successful review is completed.
Following their arrival to Pakistan on November 2, officials from the Fund are negotiating with Islamabad to strike a staff-level agreement under the $3 billion SBA programme. These talks will end on the 15th of this month.
The delegations for these talks, from the IMF and Pakistan, were led by the finance minister and the lender’s Mission Chief Nathan Porter, both of whom also held one-on-one meetings during the week.
When asked Dr Akhtar if there was a possibility of Pakistan requesting the IMF to increase the SBA programme from March to June 2024 and jacking up the size from the existing $3 billion to $3.5-$4 billion, the minister categorically replied, “No”.
To another query regarding the external financing gap, the minister replied that she would advise after the review.
Another official who is privy to the ongoing talks with the IMF said that the programme loans from the multilateral creditors including the World Bank, Asian Development Bank, Asian Infrastructure Investment Bank, and Islamic Development Bank (IsDB) were linked with the successful ongoing review of the IMF programme.
The IMF has assessed that Pakistan requires gross external financing of slightly over $29 billion including external debt servicing of $24.5 billion and a current account deficit of $4.5 billion. Now Pakistan is expecting rollover of deposits and commercial refinancing of $11 billion from bilateral friends, Islamabad would have to secure external loans of $18 billion in the current fiscal year provided all other dollar inflow targets such as exports, remittances, and foreign direct investment materialised up to the envisaged mark.
There are some serious risks to the debt dollar inflows including a $5 billion commercial loan, $1.5 billion through launching international bonds, and $500 to $750 million from IsDB through ITFC out of committed $1 billion.
If interest rates at the global level especially in the United States of America eased down and oil prices in the international market tumbled then Islamabad would be able to secure breathing space otherwise its external financing crunch might become a serious threat.
