Govt will arrange $20bn from external sources, IMF told

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ISLAMABAD: The government will arrange $20 billion from external sources to bridge the financial gap and to build the reserves for 2019, Pakistan informed International Monterey fund (IMF) in the Memorandum of Economic and Financial Policies (MEFP).

Sources said that the government has evolved a comprehensive strategy to meet the financing needs of the country. The government will issue the diaspora, sukuk and euro bonds, besides getting loans from bilateral and multilateral organizations to meet the financial gap.

Sources said that the finance ministry has estimated that China will give around $1 billion while Saudi Arabia and the Islamic Development Bank (IDB) will provide $4 billion. In addition, Asian Development Bank (ADB) and World Bank would provide around $1.2 billion loans and $700 million through bonds.

Sources said that the government will also make commercial borrowing as well as arrange finance from friendly countries.

It is pertinent to mention that Pakistan has received $1.5 billion in loans and grants from different countries and multilateral institutions in the first four months of the current fiscal year.

Sources said that the bilateral inflows and oil supplied on deferred payments have also helped Pakistan bridge the financial gap for 2019, as the country was in need of $12 to overcome the balance of payment crisis.

“Pakistan pays a hefty amount to KSA and UAE against procurement of oil, as it imports 210,000 barrels crude oil per day. After getting the oil on deferred payment from Saudi Arabia, Pakistan can adjust the money in other heads,” they added.

Moreover, the government’s recent actions pertaining to exchange rate adjustment, fiscal tightening, and rationalization of gas and electricity tariffs have started showing the results, sources said.  These actions will not only mitigate risks to debt sustainability but will also enhance the foreign exchange reserves by up to $10 billion by the end of the current fiscal year 2018-19.

The IMF team will evaluate the MEFP report during the executive board meeting which is going to be held next month in the USA.

 

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