State Bank of Pakistan (SBP) Acting Governor Dr Murtaza Syed said on Saturday that Pakistan’s external financing needs of $33.5 billion for the fiscal year 2022/23 have been fully met, adding that its financial position Concerns about the “unfair” market will dissipate in weeks.
Fears over Pakistan’s faltering economy have risen with the rupee falling nearly eight per cent against the US dollar in the last trading week, with inflation keeping forex reserves below $10 billion. Highest in more than a decade.
“Our external financial needs are fully met over the next 12 months, based on our ongoing IMF programme,” Syed said. Reuters In response to email questions.
Pakistan last week reached An employee-level agreement with the IMF for the distribution of $1.17bn in critical funding under the resume payment of a bailout package.
“The recently secured staff-level agreement on the next IMF review is a very important anchor that clearly separates Pakistan from vulnerable countries, most of which do not have IMF support,” he said.
While the lender’s board needs to approve the settlement before disbursement, which is expected to happen in August, prior policy actions are yet to be completed, according to sources familiar with the matter.
But some question Pakistan’s ability to meet external financing needs, including debt obligations, despite IMF funding.
Syed played down those concerns, saying that Pakistan’s public debt profile, which is one of the “main flashpoints” for markets these days, is much better than that of vulnerable countries with high public debt.
The country’s public debt-to-GDP ratio is 71 percent.
“Pakistan’s external debt is low, of relatively long maturity, and on easier terms as it leans heavily towards concessional multilateral and official bilateral financing rather than expensive commercial borrowings,” he said.
In a recent presentation to international investors reviewed by ReutersSyed said $33.5bn in gross external financing needs would be met “comfortably” with $35.9bn in financing available.
Most of the financing was shown by the rollover of multilateral, oil payment facilities and bilateral financing, and the heaviest financing was needed in the second quarter of fiscal year 2022–23.
The presentation also compared the situation in Pakistan with that of Sri Lanka, which recent errorand said: “Pakistan tightened Allowed the exchange rate to depreciate as monetary policy and external pressure began. ,
It added that Sri Lanka’s fiscal position was much worse than that of Pakistan, with the primary deficit being three to four times larger since the pandemic.
Syed said Pakistan was being unfairly grouped with more vulnerable countries amid panic in global markets due to the commodity supercycle, tightening by the US Federal Reserve and geopolitical tensions.
“Markets are responding to these shocks incorrectly, without paying enough attention to the relative strength of Pakistan,” he said.
“We hope that this reality will emerge in the coming weeks and the unwanted fears surrounding Pakistan will end.”