Pakistan’s forex reserves to be $9bn by end of current fiscal: IMF

ISLAMABAD: The International Monetary Fund (IMF) has estimated that Pakistan’s foreign exchange reserves held by the State Bank of Pakistan (SBP) would be standing at $9 billion by the end of the current fiscal year.

Although the IMF did not forecast any gap on the external account front, a worrisome projection was made by the Fund that the remittances from abroad would decrease by $3.5 billion, from an earlier envisaged target of $32.889 billion to $29.377 billion for the current fiscal year ending on June 30, 2024.

The oil import bill might go up from $15.3 billion to $17.63 billion on per annum basis for the current fiscal year, the Fund said.

The projection about the foreign exchange reserves clearly indicates that after the expiry of ongoing $3 billion Standby Arrangement (SBA) programme, Pakistan would have to negotiate another medium-term IMF programme before next fiscal year budget, 2024-25.

Meanwhile, IMF’s Managing Director Kristalina Georgieva met Pakistan’s Caretaker Prime Minister Anwaar-ul-Haq Kakar on the sidelines of COP 28 meeting in Dubai and stated in her tweet: “Met with Pakistani Prime Minister Anwaar_Kakar at COP28. We discussed commendable progress made [by] the government to maintain economic stability and timely implementation of planned reforms.”

The IMF also assessed that Pakistan’s Net International Reserves (NIR) would be standing at negative $11 billion for end June 2024. The NIR target for end September was envisaged at negative $14.5 billion and for end December 2023 at negative $13.8 billion. The remittances in percentage of GDP might decline from 9.4 percent to 8.4 percent for the current fiscal year. The IMF projected that the remittances would be standing at just $31 billion equivalent to 8.4 percent of GDP in the next financial year 2024-25. The Current Account Deficit (CAD) was slashed down from earlier projection of $6.42 billion to $5.6 billion for the current fiscal year during the recently concluded parleys between Pakistan and the IMF after which both struck the Staff Level Agreement (SLA) under the SBA programme.

The trade balance on goods was reduced from $33.857 billion to $27.781 billion for the current fiscal year. The exports target was envisaged at $30.627 billion. The imports were reduced from $64.7 billion to $58.408 billion for the current fiscal year. The foreign direct investment has been projected to go up from $847 million to $1.07 billion for the current fiscal year. There is one good development projected by the IMF as the external debt might decrease from $130.8 billion to $123.556 billion for the current fiscal year. The gross external financing needs were also projected to decrease from $28.361 billion to $24.98 billion.