Pakistan facing "exceptionally high" economic risks, external debt to mount: IMF

By India Today World Desk: An assessment from the International Monetary Fund (IMF) has said that Pakistan’s economic challenges were complex and multifaceted and risks were exceptionally high, The Dawn reported. Pakistan’s economy is expected to be in flux for the next two to three years at least and faces significant risks, it said.

The IMF has projected an increase in Pakistan’s external debt to reach $130.850 billion in 2023-24 up from $123.574 billion in 2022-23. Pakistan’s Finance Minister Ishaq Dar has said that it is imperative for Pakistan to maintain a tight monetary policy rate.

Pakistan needs another IMF program and assistance from other multilateral lenders, the lender stated in a report released on Tuesday, according to Dawn.

“Resolving Pakistan’s structural challenges, including long-term BOP [balance of payments] pressures, will require continued adjustment and creditor support beyond the current programme period,” the Fund said in a report. The report is based on the Memorandum of Economic and Fiscal Policies (MEFP) signed by Ishaq Dar and State Bank Governor Jameel Ahmed, Dawn reported.

“A possible successor arrangement could help anchor the policy adjustment needed to restore Pakistan’s medium-term viability and capacity to repay,” the report said.

“Addressing them requires steadfast implementation of agreed policies, as well as continued financial support from external partners. Consistent and decisive implementation of programme agreements will be essential to reduce risks and maintain macroeconomic stability,” it said.

Meanwhile, cash-strapped Pakistan has received a rollover of an additional USD 600 million loan from its all-weather ally China to help shore up the country’s foreign exchange reserves on the back of an IMF deal, Prime Minister Shehbaz Sharif said on Tuesday.

It is in addition to the over USD 5 billion in loans that Beijing has rolled over for Pakistan in the last three months, helping the debt-ridden nation avert a default as negotiations to secure the IMF bailout dragged on, the Dawn newspaper reported.

Recently, the IMF approved a much-awaited $3 billion bailout for Pakistan, the global lender said, a move that’s likely to save the impoverished Islamic nation from defaulting on its debt repayments. It also received $2bn in financial support from Saudi Arabia.

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