Islamabad craves 'dollar injection' against dipping foreign currency reserves
Apr 26, 2022
Islamabad [Pakistan], April 26 : As Pakistan's foreign currency continues to witness a drop-down, the crisis-hit country requires dollar inflows of USD 9 to USD 12 billion in the shape of rollovers and fresh loans from bilateral donors and commercial banks to get a breathing space.
The revival of the IMF will only be possible till the end of June 2022 if everything goes well between the two sides.
Pakistan and the IMF will have to strike a staff-level agreement after holding talks in mid-May and then the Fund's Executive Board requires a 4 to 6 weeks period to get approval on the next tranche of USD 960 million under the USD 6 billion Extended Fund Facility (EFF), media reports stated.
Without the support of bilateral partners and seeking more loans from commercial banks, this gap cannot be fulfilled on a short-term basis, the report stated further.
Pakistan has sought a nine-month extension into an Extended Fund Facility (EFF) with an increase in the size of the program by USD 2 billion to jack up total funding of USD 8 billion. The IMF program was going to expire in September 2022 but with the request for an extension now it would be matured in June 2023.
Keeping in view the conservative estimates, the current account deficit might touch USD 16 to USD 17 billion by the end of the current fiscal year. However, some independent economists suggest that it might touch $18 to $20 billion for the current fiscal year.
"Pakistan will have muster up dollar inflows of USD 9 to USD 12 billion depending upon the level of current account deficit in remaining months so the government will have to ensure rollover of commercial loans and deposits from China, seeking more generous package from Saudi Arabia and securing commercial loans from a consortium of banks in the remaining period of the current fiscal year," top official sources confirmed while talking to The News, on Monday.
Seeking fresh deposits and utilization of oil facilities on deferred payments, Prime Minister Shehbaz Sharif will be visiting Saudi Arabia this week.
The Ministry of Finance has worked out a proposal for seeking an extension in deposits of USD 3 billion in line with the extension into the IMF programme, reported The News.
Saudi Arabia has previously deposited USD 3 billion in Pakistan's central bank to help the cash strapped country with the foreign reserves, suggested a statement by Saudi Fund for Development.
