SPEAKING to the media persons in federal capital on Thursday, Finance Minister Ishaq Dar insisted that Pakistan would not default on any foreign liability, with or without an IMF programme. There should be no concern over the repayment of $3.7 billion foreign loans during May and June and a payment plan had been firmed up.
His remarks come in the wake of Moody’s Investors Service warning that Pakistan could default without any International Monetary Fund (IMF). We understand that Dar’s optimism is probably based on the assurances extended by some friendly countries including China. During a visit to Islamabad, Chinese Foreign Minister Qing Gang had assured that his country will continue supporting Pakistan in its foreign exchange and financial stability to respond to challenges such as geo-political conflicts, international turbulence and natural disasters. Saudi Arabia and the United Arab Emirates have also pledged to provide a combined three billion dollars to Pakistan. Certainly, if these are realized, these will give much needed boost to our foreign exchange reserves but according to financial experts as well as the financial institutions, the country still would require the IMF bailout package. S&P Global Ratings said Pakistan’s gross external financing needs as a proportion of current-account receipts plus usable reserves is estimated to rise to 139.5% in the fiscal year 2024 from 133% in 2023. An agreement with the IMF would support additional financing from other multilateral and bilateral partners which will definitely help meet its liabilities beyond June. We believe there is a realization of this fact in the government quarters and most recently, it should sought the support of the IMF board to break the deadlock over the revival of the $6.5 billion loan programme as the delay is costing dearly. The government has already taken several measures such as imposed additional taxes and hike the energy tariffs. Whilst the friendly countries are also ready to extend help, it is also for the IMF to review its posture towards Pakistan. Whilst the international lender is providing loans worth billions of dollars to Ukraine where the war is raging, it should have no qualms extending the same facility to Pakistan which in fact will help the country effectively manage its affairs. The engagement process should also be accelerated with the countries which, at the Geneva Conference, pledged assistance for the reconstruction and rehabilitation of flood affected areas. These inflows will also help stabilize our currency. However, the really solution lies in uplifting the industrial, IT and agriculture sectors in such a manner that they accrue maximum benefits to our economy. It is only through enhancing our exports that we can come out of this vicious debt trap and say good bye to the IMF once and for all. The government must also take notice of recent dip in foreign remittances. These overseas Pakistanis have always played an important role in the country’s economy and they need to be given the confidence and facilities to attract investment from them in diverse sectors.
