ISLAMABAD: Pakistan’s external gross financing requirements and the risk they pose to the sustainability of the external account have been exaggerated by media reports, said a Ministry of Finance (MoF) press release.
The ministry of finance in a press release here on Saturday clarified the recent media reports that have misinterpreted external account data. Pakistan’s gross external financing requirements for FY 2018 have been misreported with figures ranging between $ 12 billion to $ 31 billion, it added.
The spokesperson for the ministry of finance said that Pakistan continues to maintain a healthy level of foreign exchange reserves despite external and internal pressures. Furthermore, he added that the gross financing needs for the FY 2018 are not as high as being reported. As per international standards, a country’s gross financing needs are an aggregate of current account deficit plus debt servicing for the year. According to internationally recognised accounting standards, Pakistan’s gross financing needs for 2017- 18 are estimated at $ 17-18 billion, which equates to 5-5.3 per cent of the GDP.
He further clarified that the gross financing needs represent a country’s current account deficit, medium long-term amortisation and short-term external debt.
Pakistan’s gross financing needs for FY 2016-17 stood at $ 17.107 billion, 5.6 per cent of the GDP. MoF spokesperson said that the current year’s financing needs show a decrease in the percentage in relation to the country’s GDP.
The press release also clarified that arrangements such as inflows from multilateral and bilateral sources, Sukuk and Euro bonds, privatisation proceeds, foreign direct investment, private capital inflows and commercial financing are in place to meet the gross external financing needs of the country. Pakistan’s only faces an estimated financing gap in the range of $ 2-2.5 billion.
It may be mentioned here that the newly appointed Finance Advisor Miftah Ismail said that the government will focus on tax reforms for overseas Pakistanis and will consider further financing through Sukuk and Eurobonds in 2018.
MoF spokesman said that the data for the first five months of the current financial year reveal a 12 per cent growth in exports and a recovering external sector despite being negative for years. He further added that FDI has recorded a 57 per cent growth in the first five months whereas remittances have also started to register growth.
He reiterated that Pakistan is on a positive growth trend and speculations regarding foreign-exchange reserves and the sustainability of the external account should best be avoided.
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