Govt projects external financing need at $18bln in FY18

ISLAMABAD: Pakistan will need $18 billion to meet its gross financing requirements during the current fiscal 2017/18, a finance ministry’s spokesman said on Wednesday, brushing aside external account vulnerability and risk to economic stability.

The spokesman said the gross financing need’s projection is based on international standards and the figure, equivalent to 5.3 percent of GDP, is an aggregate of current account deficit and debt servicing.  

The ministry’s official termed the inclusion of portfolio investment into external financing needs as misinterpretation of standards.  Financing requirements come at $31 billion or nine percent of GDP, if the portfolio investment of four percent of GDP or $13.8 billion is taken into account.

“As per the international reporting standards, portfolio investment is not included while calculating the gross financing needs of a country,” the ministry’s spokesman said in a statement.  The official said total portfolio investment stood at $6.6 billion or 1.94 percent of GDP as of September.

Finance ministry’s official said exports and remittances have improved and imports slowed down. “As a result of improvement in these key economic indicators, the current account deficit during July-August, 2017 stood at $2.60 billion as compared to $3.10 billion in May-June 2017, showing a substantial improvement of 16.2 percent,” the official added. “With these positive trends strengthening in coming months, current account deficit would improve significantly, which will also improve foreign exchange reserves of the country.”