Web Desk (LTN NEWS): Pakistan needs help right away from friendly countries like Saudi Arabia and China, as well as the IMF, to avoid a balance-of-payments crisis. This is because Pakistan’s foreign currency reserves have dropped to $7.5 billion.
Prime Minister Shehbaz Sharif and his team, including Minister for Finance Ishaq Dar, are currently in the Kingdom of Saudi Arabia. There, he will talk to the government about the rollover of $3 billion deposits, additional financial support, the oil facility’s continuation on deferred payment, and the possibility of investing $10–12 billion to build the Petrochemical Complex at Gwadar Port.
The government of Pakistan is also thinking about asking Saudi Arabia for budgetary support during the current fiscal year. The Pakistani delegation will also meet with the Saudi Development Fund (SDF), whose delegation is also expected to visit Pakistan next month to finalize future investments for building a refinery in Gwadar.
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Shehbaz Sharif, the prime minister, also plans to visit China next month. Pakistan owes China $23 billion in bilateral debt, and it will ask China to roll over $6.3 billion in SAFE deposits and commercial loans. It will also ask for more help to meet its significant external financing needs for the current fiscal year.
The prime minister will ask China for more money to start the second phase of the China-Pakistan Economic Corridor (CPEC) to start working together on industrial, agricultural, and other projects. Pakistan needs $32 billion to $34 billion from outside sources in the current fiscal year. Islamabad has gotten $2.23 in dollars from outside the country so far.
Billion in the first three months of the fiscal year 2022
Before Prime Minister Shehbaz Sharif left for Saudi Arabia on Monday, he and the ADB signed a $1.5 billion loan agreement. It is hoped that the money will be given out this week.
On the IMF front, Pakistan and the IMF’s top leaders have decided to keep the upcoming review talks for a shorter time so that official data can be shared and Pakistani leaders can answer questions from the IMF.
Because of the severe flooding, the right people have not finished putting together the official data. This means the upcoming review talks could be postponed for a few weeks. The government thinks the tentative plan for talks could be set for November 5, 2022, but the place has not yet been decided.
However, neither side has agreed on a specific timetable for upcoming talks to finish the 9th review and release the next $1 billion under the Extended Fund Facility (EFF). The finance minister said review talks could start on October 25, 2022, but the IMF director for the Middle East said it would not happen until November 20, 2022.
When this writer asked the top people in the Ministry of Finance for their thoughts, they said that review meeting dates had not been set yet. “It was agreed with the IMF that work would be done ahead of time to ensure that the formal review mission would be short. So, information is shared, and questions are answered,” they said.
Officials are not saying much, but the people in charge say that the Net International Reserves (NIR) held by the State Bank of Pakistan and keeping the budget deficit within the planned limits could be contentious issues in the upcoming review talks between the two countries.
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