More information on Pakistan’s budget is required by the International Monetary Fund.

World News

Islamabad: The International Monetary Fund (IMF) asked Pakistan for more information about the budget prior to the start of virtual negotiations because the nation urgently needs to secure USD 10 billion in foreign loans, according to Geo News.

According to a government official, the stalled IMF programme makes it impossible to raise the $8 to $10 billion in external financing needed to manage the current account deficit and the remaining loan repayment obligations.

In the meantime, the government is prepared to present its strategy to eliminate the circular debt of the gas sector before the upcoming federal cabinet meeting by raising gas prices and making adjustments to the current slabs to satisfy the IMF requirement.

The IMF is currently Pakistan’s only access point for solving its financial crisis-related issues. Prior to this, Pakistan revealed the general scope of the 9th review under the USD 7 billion Extended Fund Facility (EFF).

However, Pakistan faces a serious short-term challenge as Islamabad must secure new loans totaling USD 10 billion in the next five months (Feb.-Jun.) in order to avoid default, according to a report from Geo News.

In light of this, the government requested the IMF to revive the programme that has been stalled since last November by sending them an SOS (Save Our Soul) letter. Since then, the nation has been heading toward the verge of a complete economic collapse.

In spite of the policy-induced contraction in the current account deficit during the first half of FY23, the State Bank of Pakistan (SBP) acknowledged in its most recent monetary policy that short-term difficulties for the external sector have increased.

According to a source speaking to The News on Monday, “The fresh loans requirements of USD 8 to USD 10 billion cannot be managed without blessings of the revival of the IMF programme.”

In the current fiscal year 2022–2023, Pakistan was required to repay USD 23 billion, of which it had already repaid USD 15 billion in the form of servicing external debt. In the first half of the current fiscal year, the government secured a rollover of $6 billion and repaid USD 9 billion of the USD 15 billion in debt.

Currently, the remaining repayment obligation for the second half (Jan-June) of the current fiscal year is USD 8 billion. According to Geo News, the government has a commitment to receive a rollover of USD 3 billion from the bilateral creditor in March 2023.

According to the official, “On the repayment of external debt, there is the exposure of USD 5 billion that has so far remained unfulfilled, increasing exposure and risk for the country.”

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