LAHORE: Minister for Finance Muhammad Aurangzeb on Friday called on Prime Minister Muhammad Shehbaz Sharif and briefed him about the upcoming visit to the United States.
The finance minister discussed with the prime minister his scheduled meetings with the International Monetary Fund (IMF), World Bank (WB) and other institutions, according to a PM Office press release.
In the meeting, they also deliberated upon the overall economic situation of the country.
Meanwhile, IMF chief Kristalina Georgieva said Pakistan is in discussions with the International Monetary Fund on a potential follow-up programme to its nine-month, $3 billion Stand-By Arrangement (SBA), adding that it had important issues to solve.
Georgieva told an event at the Atlantic Council think tank, that Pakistan was successfully completing its existing programme with the IMF and its economy was performing somewhat better, with reserves now being built up.
“There is a commitment to continue on this path, and the country is turning to the fund for potentially having a follow-up programme,” Georgieva said, flagging issues that the struggling South Asian nation still needed to address.
“There are very important issues to be solved in Pakistan: the tax base, how the richer part of society contributes to the economy, the way public spending is being directed and of course, creating ... a more transparent environment.”
Pakistan and the IMF last month reached a staff-level agreement on the second and last review of the $3 billion stand-by arrangement, which, if cleared by the global lender’s board, will release about $1.1 billion to the South Asian nation.
The IMF board is expected to review the matter in late April, but no firm date has been set, a spokesperson said.
Both sides have also spoken about negotiating a longer-term bailout and continuing with necessary policy reforms to rein in deficits, build up reserves and manage soaring debt servicing.
Meanwhile, amid seeking fresh bailout package from the IMF under the Extended Fund Facility (EFF) on the sidelines of upcoming annual spring meetings, Pakistan is all set to repay its foreign debt repayment of $1 billion on maturity of international bond on the coming Monday (April 15, 2024).
Pakistan also expects that the last tranche of SBA to the tune of $1.1 billion will be approved and disbursed within the ongoing month. So the foreign exchange reserves held by the SBP would not face any substantial change as the amount of $1.1 billion was expected to be received within April 2024.
Now Islamabad will have to make repayments on external debt to the tune of $4.3 billion in the last quarter (April-June) period of the current fiscal year.
Pakistan will also have to pay back $1 billion to China as Chinese SAFE deposit during the last quarter of the current fiscal year. Now the prime minister will have to send another request to the Chinese side for granting a rollover on the $1 billion SAFE deposit for another year.
The government will have to pay back $32.88 million to commercial banks in the last quarter of the current fiscal year in principal and interest repayments.
The government is also bound to repay $706 million to all bilateral creditors during the last three months of the current fiscal year, including $218 million to Japan, $149 million to France, $48 million to Korea and several other countries.
Pakistan will also have to repay $1.232 billion to commercial banks during the last quarter of the current fiscal year. The country will have to pay back $265 million to the IMF as principal and interest repayment in the last quarter of the current fiscal year. The Naya Pakistan Certificates-related repayments will be standing at $66 million in the last quarter of the current financial year.
Besides, the government will have to pay back $754 million to multilateral creditors as external debt servicing repayments and the largest chunk of debt repayments will be given to the Asian Development Bank (ADB) to the tune of $406.8 million in the last quarter of the current fiscal year, and also WB’s IDA lending of $185.3 million and others.
The foreign exchange reserves held by the State Bank of Pakistan stood at $8.04 billion on March 29, 2024. Despite entering into an SBA arrangement with the IMF, the foreign exchange reserves held by the SBP could not be built up in the wake of heavy debt repayments of both principal and interest repayments.
Under the SBA programme, the country committed to build up a buffer of raising the foreign exchange reserves but foreign inflows could not be materialized up to the desired mark so far in the current fiscal year, making it hard to shore up the dwindling reserves. Thus, it left no other option but to seek another programme, the 24th, from the IMF under the EFF arrangement.
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