Pakistan eyeing $4.5bn from creditors: minister

Pakistan expects to raise approximately $4.5 billion from multilateral and bilateral sources, excluding the International Monetary Fund (IMF), in the current fiscal year (2023-24), interim Finance Minister Dr Shamshad Akhtar said.

In an interview with the official flagship Journal of ICMA International, the minister said for the second quarter (Q2), the government expects to receive over $1.6 billion from these sources.

She said the major creditors include the Asian Development Bank, the World Bank, and the Asian Infrastructure Investment Bank, adding the inflows comprise both project-based and programme-based funds.

In a note released today, Fitch Ratings said that Pakistan's forex reserves have recovered on inflows of new funding and limited current account deficits, and it expected to further increase.

Official gross reserves, including gold, were $12.7 billion in October (about three months of imports), up from about $8 billion at the start of 2023, but well below the peak of $23 billion at end-2021.

The central bank's net liquid forex reserves have been hovering at just over $7 billion since October (about two months of imports), from a low of about $3 billion in January. A contraction in imports helped reserve coverage ratios.

The minister said negotiations for some programme loans have been completed, and disbursements are expected. “The country is currently meeting its debt obligations in a timely manner and intends to continue doing so in the future.”

Talking about the IMF programme, the minister said as the first review of the Standby Agreement was successfully concluded, a Staff Level Agreement (SLA) has been reached.

This is subject to approval by the IMF’s Executive Board and upon approval, Pakistan will have access to SDR525 million (around $700 million).

Regarding the existing economic situation, the minister said despite domestic and global challenges during FY2023, fiscal and external sector stability has been achieved through various stabilisation measures and structural reforms.

The fiscal deficit stood at 7.7% of GDP during FY2023 as compared to 7.9% last year, while the current account deficit FY2023 narrowed down by 87.2% to $ 2.2 billion against a deficit of $ 17.5 billion in FY 2022.

She noted that the trade deficit was contained by 38.7% in FY2023 as compared to the expansion of 36.4% in FY2022.