It is not hidden from the world that Pakistan has become a begging bowl and is unable to control inflation. Recently, a Pakistani delegation went to several countries seeking financial assistance for flood relief as well as financial relief. Pakistan is also in touch with the International Monetary Fund to release the next tranche of loan.
Pakistan Prime Minister Shehbaz Sharif has said that it is a matter of shame that a nuclear-armed country has to beg in the midst of its faltering economy, The News International reported. Addressing the passing-out ceremony of probationary officers of the Pakistan Administrative Service (PAS) on Saturday, Shehbaz said that it actually embarrasses them to ask for more loans, adding that seeking foreign loans adds to Pakistan’s economic challenges. Addressing as loan was not the correct solution. have to return. He said that during his recent visit to the United Arab Emirates (UAE), President Sheikh Mohammed bin Zayed had announced a further line of credit of USD 1 billion to Pakistan.
Speaking on the occasion, PM Shahbaz also appreciated Saudi Arabia for the financial assistance, reports The News International. Sources told The News International that the final wording has been done with the International Monetary Fund (IMF). Government sources said Saudi officials are “studying” the possibility of more deposits in Pakistan amid the shortage of foreign exchange reserves.
According to the report, a senior finance ministry official said that the uncertain political situation was impeding the decision-making process, making it difficult for policy makers to make the tough choices needed to revive the IMF programme. Official sources told the publication that the government does not have much time to act as foreign exchange reserves held by the State Bank of Pakistan (SBP) are depleting at a rapid pace. As of January 6, the foreign exchange reserves with the SBP were just $4.3 billion.
The foreign exchange reserves of commercial banks stood at US$5.8 billion, making the country’s cumulative reserves around US$10.18 billion. SBP reserves declined by USD 12.3 billion in last 12 months; US$ 16.6 billion on January 22, 2022 to US$ 4.3 billion on January 6, 2023. A few days ago, Shahbaz indicated that an IMF review mission may visit Pakistan, but that is yet to happen, reported The News International. Experts say there is a lack of understanding on how to proceed and the situation has reached a tipping point and only clear-sighted action can avert the crisis.
Furthermore, the government’s strategy of receiving dollar flows from friendly countries and using them as bridge financing until the IMF program is revived has so far failed. According to The News International report, friendly countries like Saudi Arabia are studying the possibility of depositing an additional USD 2 billion, but it is not yet clear how long it will take them to make a decision.
The United Arab Emirates (UAE) also agreed to roll over USD 2 billion in existing deposits, but said nothing about an additional USD 1 billion deposit request in a joint statement issued at the conclusion of the Prime Minister’s visit to the country. Told. Notably, a visit by an IMF review mission has not yet been confirmed, as the government has been unable to make unpopular decisions, including hiking gas and electricity tariffs and taking additional taxation measures. Only tough measures taken by the government can pave the way for completion. The report of the 9th review pending under the Extended Fund Facility (EFF), reported The News International. (With ANI inputs)