Islamabad, Sep 19: Pakistan’s external account position remains vulnerable despite the latest International Monetary Fund (IMF) program, Minister of State for Finance Ali Pervaiz Malik told the National Assembly Committee on Finance on Thursday.
Pakistan’s Finance Minister Muhammad Aurangzeb has highlighted the country’s pressing financial requirements, indicating that Pakistan needs an additional $12 billion by 2027 on top of the $7 billion IMF program.
He stressed the importance of developing a long-term economic policy to stabilize the economy. Reducing the policy rate by 1% could decrease the loan burden by Rs. 320 billion. The country’s financial needs exceed the current IMF bailout package, requiring $5 billion from other sources, alongside assurances from friendly nations for loan rollovers.
Key Points:
- Urgent Financing Needs: Pakistan requires $12 billion by 2027 in addition to the $7 billion IMF package. The country’s financial needs include $5 billion from commercial banks and other lenders.
- Current IMF Program: The IMF is aware of the assurances from friendly countries regarding loan rollovers, which has led to a scheduled meeting to discuss Pakistan’s program further. The IMF is also informed about ongoing reforms in Pakistan’s power sector.
- Long-Term Financial Strategy: Pakistan needs to arrange $100 billion in external financing over the next four years, including rolling over $12.7 billion in deposits from countries like China, Saudi Arabia, and the UAE.
- Economic Position: Despite an increase in foreign exchange reserves to $9.5 billion, Pakistan’s external account remains fragile. The debt-to-GDP ratio has improved from 76.6% to 67.2% over the past five years, but total debt has risen to Rs. 71 trillion, with 66% domestic and 34% external debt.
- Committee Concerns: The committee expressed dissatisfaction with the current economic situation, citing rising oil prices and strains on foreign exchange reserves. Hina Rabbani Khar criticized the lack of sustainable economic strategies, describing the economy as being in the “ICU.”
The Finance Minister’s statements and the committee’s concerns underscore the urgent need for comprehensive economic reforms and strategic financial planning to address Pakistan’s significant financial and economic challenges
