Growing Financing Needs May Force Pakistan To Seek New IMF Loan To Meet It's Economic Needs
Islamabad: Pakistan as it faces increased economic pressure may be forced to seek a new International Monetary Fund loan (IMF) to meet its gross financial needs.
Pakistan's gross financing requirements are estimated to go up to USD 30 billion in the next budget for 2022-23, leaving no other options for the Imran Khan government but to seek a fresh IMF loan after the expiry of the existing program in September 2022, according to News International.
If Islamabad manages successfully to revive the existing stalled program of USD 6 billion Extended Fund Facility (EFF) of the IMF after completion of the sixth review, then two more reviews seventh and eighth would be required to be accomplished till September 2022 for qualifying to complete the 39-month EFF program, according to News International.
Meanwhile, Pakistan's federal cabinet recently approved its National Security Policy, which advises refraining from getting loans from the IMF and other multilateral creditors.
Further, Islamabad could only avoid seeking the IMF loan, provided the country manages to boost up non-debt creating dollar inflows through raising Pakistan-made ups exports, remittances, and foreign direct investment (FDI) in a substantial manner.
The policy of restricting imports does not provide permanent solutions, mainly because Islamabad had to rely heavily on imports on account of getting raw material to increase the exports, according to a World Bank report.
The IMF has assessed that Pakistan's gross financing requirement will be standing at USD 28 billion in the next fiscal year 2022-23 but keeping in view the higher current account deficit projections, it is expected that the overall external financing requirement will cross USD 30 billion mark in the next fiscal year.
The Pakistani authorities will need a serious plan that how this kind of elevated foreign financing requirement will be met as the IMF program comes to an end in September 2022, according to News International.
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