Pakistan needs $25b loans this FY: IMF

FE Team | Published: November 18, 2023 21:56:19

ISLAMABAD, Nov 18 (Express Tribune): The International Monetary Fund (IMF) has revised Pakistan's foreign loan requirements to $25 billion for this fiscal year-reducing it by $3.4 billion-and also lowered the economic growth projection to just 2 per cent, turning down the government's external as well as macroeconomic forecasts.
Finance ministry sources said the IMF had also lowered its inflation projection for the country to 22.8 per cent for this fiscal year-reducing it from 25.9 per cent.
The IMF did not accept the finance ministry's projections for the current account deficit (CAD), imports, economic growth, inflation and gross financing requirements.
However, it adjusted all these numbers during the first review talks in comparison with the estimates of July this year.
The revisions to the gross external financing requirements-a sum of money needed to fill the CAD as well as the repayment of maturing debt --- and to the macroeconomic projections were made during this week's first review of the $3 billion bailout package.
The IMF remained successful in acquiring a date for the general elections and in return ignored a few critical areas, which in the past had become a cause for the failure of the previous $6.5 billion bailout package.
It also brought the activities of the Special Investment Facilitation Council under its purview.
The finance ministry spokesperson, Qamar Abbasi, did not respond to a request for comments.
In comparison with July this year, the IMF lowered the foreign loan requirements for this fiscal year from $28.4 billion to $25 billion-a reduction of $3.4 billion.
Read Pakistan to stay tethered to IMF
In four months, the government has already borrowed $6 billion while it expects rollovers of $12.5 billion.
The remaining needs are about $6.5 billion in addition to the efforts for timely securing the $12.5 billion debt rollovers, said the sources.
Finance Secretary Imdadullah Bosal on Thursday said the interim government was comfortable that it would secure the needed financing to remain afloat.
However, there will not be much respite for the government as the estimated available financing has also been cut by $3.7 billion because of the problems in acquiring loans through floating Eurobonds and from foreign commercial banks.
The sources said that the Washington-based lender did not agree to Pakistan's projection of $4 billion to $4.5 billion CAD during this fiscal year against the earlier projected figure of $6.5 billion.
They added that the IMF had now projected a deficit of $5.7 billion-a reduction of about $770 million in comparison with its old estimates.
The IMF also did not accept the finance ministry's projection of imports worth $54.5 billion during this fiscal year.
The lender has now estimated it at $58.4 billion, but its revised figure is $6.3 billion less than what it estimated in July this year.
Some of the gains that Pakistan will make because of the low imports are expected to be lost because of a reduction in the projected remittances.
As against the old forecast of $32.9 billion, the IMF has now projected the foreign remittances at $29.4 billion-a reduction of $3.5 billion, the sources revealed.