Islamabad [Pakistan], July 20 (ANI): Pakistan Finance Minister Mohammad Aurangzeb said that the country will focus on meeting its external financing needs by speaking with foreign governments and lenders to draw foreign investment as well as seeking loan rollovers, reported Dawn.
The Pakistani government has been preparing to execute its new USD 7 billion International Monetary Fund (IMF) agreement.
Earlier this month, Pakistan and the IMF reached an agreement for the 37-month loan programme.
However, measures taken by Pakistani authorities, including raising taxes on agricultural incomes and lifting electricity prices, have prompted concerns about poor and middle-class people grappling with rising inflation and the prospect of higher taxes, Dawn reported.
The economically crippled country has relied heavily on IMF programmes for years, at times nearing the brink of sovereign default and having to turn to countries such as the United Arab Emirates (UAE) and Saudi Arabia to provide it with financing to meet external financing targets set by the IMF.
The finance minister in an interview said that external financing continued to be an important component, though the government was seeking to focus on more sustainable forms such as direct investment and climate financing.
“I think in the existing situation we can expect those (loan) rollovers to continue to take place…we have requested extensions of maturities,” Aurangzeb said.
The IMF has mentioned that the new Extended Fund Facility programme is subject to approval from its executive board and obtaining “timely confirmation of necessary financing assurances from Pakistan’s development and bilateral partners.”
Pakistan’s finance minister, in a meeting, said that the external financing gap was “very manageable and very doable.”
He said Pakistan plans to expand its strategy beyond relying heavily on rollovers and towards foreign direct investment, including in the huge copper and gold Reko Diq mine in southern Pakistan.
The government was working on identifying “bankable and investable” projects for Saudi Arabia and the UAE, which announced interest in billions of dollars in investment in the country, he added.
“That is what’s going to lead to sustainability,” he said. “If we can’t get this executed in the next three years, we will not be able to get out of the ‘last’ programme.”
Pakistan has been plagued by boom-and-bust cycles for decades, which forced them to take over 20 IMF bailouts since 1958, as reported by Dawn.
Currently, it is the IMF’s fifth-largest debtor, owing USD 6.28 billion as of July 11, according to IMF data.
Moreover, Pakistan, being one of the countries worst affected by climate change, has also agreed with the IMF to launch talks this year on financing under the Fund’s Resilience and Sustainability Trust (RST) to draw financing for projects related to climate change.
In 2022, massive floods caused billions of dollars of damage to infrastructure and agriculture, besides claiming hundreds of lives, Dawn reported.
“We will start the discussions around that during this calendar year, possibly at the time of the first review, which will be in October, around the annual meetings in Washington,” Aurangzeb said, though he did not specify how much the government would request. (ANI)
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