Pakistan wants to raise up to $4 billion from Middle Eastern commercial banks by the next fiscal year, according to the governor of the State Bank of Pakistan (SBP). This is part of efforts to address external financing deficits.
In his first media interview since taking office in 2022, State Bank of Pakistan Governor Jameel Ahmad stated that Pakistan is in the “advanced stages” of securing $2 billion in additional external financing for an IMF-approved $7 billion bailout program.
Pakistan and the IMF agreed on a loan program in July, subject to approval from the IMF’s executive board and timely confirmation of finance pledges from Pakistan’s development and bilateral partners.
When asked about monetary policy, Ahmad stated that recent interest rate reduction in Pakistan have had the expected effect, with inflation continuing to fall and the current account remaining under control despite the cutbacks.
In July, Pakistan’s annual consumer price index inflation was 11.1%, down from a high of more than 30% in 2023.
“The Monetary Policy Committee will review all of these developments,” Ahmad said, adding that future rate decisions cannot be predicted.
Pak’s central bank has reduced interest rates from 22 percent to 19.5 percent in two consecutive meetings. The bank will review monetary policy again on September 12.
“Now we have to focus on growth and other related areas because those are also equally important for job creation and other socioeconomic issues,” Ahmad told reporters.
He noted that the central bank’s job was to maintain price and financial stability before shifting its focus to growth.
Previously, it was claimed that the country was in talks with Middle Eastern banks to secure approximately $4 billion in loans to cover external financial demands during the current fiscal year.
For the current fiscal year, Pak had budgeted for approximately $20 billion in foreign borrowing, in addition to a $3 billion rollover from the UAE that was reported separately for the balance of payments. With this much borrowing, Pakistan’s reserves are expected to rise to around $19-20 billion by the conclusion of the current fiscal year.
Of the $20 billion estimate, approximately $4 billion is expected to be handled through overseas commercial borrowing during the current fiscal year, with an additional $1 billion in international bonds.
Source: Reuters
