The All Pakistan Business Forum (APBF) has said that although the IMF deal with Pakistan a positive development for the economy but warned that Pakistan’s liquidity risks remain high in spite of the staff-level agreement with the International Monetary Fund for a Stand-by Arrangement of $ 3 billion for a nine-month period, as this bailout alone can’t put economy back on track.
President APBF Syed Maaz Mahmood said that that the multilateral donors financing might not bring any significant impact on struggling economy, as the sustainable solution to Pakistan’s economic issues lies in the structural reforms and consistent policies.
He said that the obvious reason: 4,069 million dollar foreign exchange reserves are simply not enough to meet even one month of imports, 3.68 billion dollar estimated decline in remittance inflows, clocking at 24.8 billion dollars July-May 2023 compared to 28.48 billion dollars during the comparable period the year before. Besides this decline in exports, home remittances by the Pakistanis abroad, the other desired form of foreign exchange earnings, also fell from 31,782 million dollars during July-June 2022 to 27,744 million dollars in 2023.
Chairman APBF Ibrahim Qureshi said that the deal would end speculation of a possible default, but the country’s debt troubles won’t end there, as the more IMF aid will be needed in 2024, he added.
He said that the rupee will strengthen which will reduce inflation, so, the IMF agreement is overall a good development.
Ibrahim Qureshi expressed his opinion on the agreement with the International Monetary Fund and said that there is positive news at the beginning of the new fiscal year, as it was not expected but the agreement was reached. Now the rupee will strengthen, which will reduce inflation.
Maaz Mahmood said that there is a 9-month agreement which is very positive, as the caretaker government will remain in the facility, however, the IMF conditions have increased the cost of production. He said that government will make payments to exporters when fiscal space is created. He said that Pakistan is likely to avert default this year, as the country managed to secure a last-minute International Monetary Fund (IMF) bailout.
The APFB President said that the funding from IMF would also unlock another $3 billion in loans pledged by Saudi Arabia and the UAE. Together, the loans should allow the country to repay its debts through April 2024, assuming that the current account deficit for the fiscal year comes in below $4 billion as the central bank projects, he said.
He projected that Pakistan dollar funds could rise up to $9.5 billion on account of inflows from the IMF and friendly nations. However, this won’t be enough to repay $8.7 billion in loans (net of rollovers) in the year starting July and also pay the country’s import bills for the full fiscal year.
