IMF puts Pakistan’s external funds requirement at $91.5bn over three years

ISLAMABAD: The International Monetary Fund (IMF) has projected Pakistan’s gross external financing needs at a whopping $91.536 billion over a three-year period starting from fiscal years 2023-24 to 2025-26.

Such a mammoth requirement of gross financing needs of $91.5 billion over a three-year period clearly indicates that Islamabad will have no other option but to go back for another IMF bailout package after the expiry of the existing one under the $3 billion Standby Arrangement (SBA) in March 2024.

The SBA will only be a stop-gap arrangement, and Pakistan will have to strive for a new medium-term arrangement when the new government is in power.

“There should be clarity that the country will have no other choice but to go for the medium-term three-year programme under the IMF after the expiry of the existing SBA,” top official sources privy to the ongoing Pak-IMF talks conceded while talking to The News here on Tuesday.

It is estimated that the current account deficit might be curtailed in the range of $6 billion to $7 billion over the next three years, so the overall CAD might remain within the range of $20.6 billion over the next three years. The import compression will persist.

The IMF working group has projected that the country’s imports would stand at $64.109 billion in the fiscal year 2023-24, $64.9 billion in 2024-25, and $71.115 billion in the fiscal year 2025-26. The exports of the country are projected to stand at $30.8 billion in 2023-24, $31.14 billion in 2024-25, and $35.8 billion in 2025-26.

According to estimates worked out by the IMF staff and Pakistani authorities under the $3 billion Standby Arrangement (SBA) programme, the gross financing needs in total stood at $91.53 billion over the next three years. The current account deficit (CAD) has been projected at $20.618 billion over the next three years, starting from fiscal years 2023-24 to 2025-26.

According to the agreed projections between the IMF staff and Pakistani authorities, the gross financing needs would climb to $28.409 billion during the current financial year 2023-24. Pakistan’s external debt repayments were estimated to hover around $22-$23 billion in the current fiscal year, while the remaining $6.4 billion would be required to meet the current account deficit. The foreign exchange reserves held by the SBP will be standing at $11.712 billion by the end of the fiscal year 2023-24

The gross financing needs are all projected to rise up to $30.615 billion in the next financial year 2024-25 out of which the current account deficit is estimated at $6.75 billion. The foreign exchange reserves held by the State Bank of Pakistan (SBP) are projected to hover around $12.673 billion in the fiscal year 2024-25.

The country’s gross financing needs will further go up to $32.514 billion in the financial year 2025-26. The foreign exchange of SBP is projected at $13.809 billion in the financial year 2025-26.