‘Continued threats to Pakistan’s financial sustainability despite IMF deal’

Islamabad [Pakistan], July 31 (ANI): Global credit rating agency has warned of continued threats to Pakistan’s financial sustainability. This comes despite the country receiving USD 3 billion lifeline from the International Monetary Fund (IMF). Khalsa Vox reported.

Moody’s Investors Service said Pakistan has USD 25 billion of repayments due in FY24.
Pakistan last week signed a USD 3 billion loan programme with the IMF, following the revival of the USD 7 billion programme that was officially ending prematurely the same day.

As per Khalsa Vox, the programme is expected to make the required foreign exchange available to reopen imports, help listed companies to gradually ramp up the partially closed production, and reenergize economic activities in the country.

The IMF programme has also signalled other donor agencies and friendly countries to extend new financing to Islamabad as they pledged USD 9 billion at a Geneva meeting in January 2023.

The Pakistan government is looking at a USD 25 billion debt repayment hurdle in the year starting July.

Pakistan had to increase taxes, cut spending, and raise its primary interest rate to a historic peak in order to secure the initial agreement with the IMF.

The initial IMF agreement though welcomed by the markets, is still awaiting approval by the IMF Executive Board.

An analyst at Moody’s in Singapore, Grace Lim, expressed uncertainty about Pakistan’s ability to secure the complete IMF financing during the standby period.

“It is uncertain that the Pakistani government will be able to secure full USD 3 billion of IMF financing during the nine-month stand-by arrangement program,” Lim said.

The Pakistan government’s commitment to continually implement reforms will be tested as it goes into elections due by October 2023, she said, as per Khalsa Vox.