Pakistan’s government is unable to acquire finance from the global bond market or commercial banks, making a deal with the International Monetary Fund all the more vital, according to Finance Minister Miftah Ismail.
Pakistan’s dollar bonds, which had hit a new low earlier this month, rose on Friday after the government increased gasoline prices, which is a major criterion for the IMF to continue its lending programme. In June, Pakistan hopes to reach an agreement with the fund on a personnel level.
“All roads lead to the IMF,” Ismail said Saturday to a virtual conference. “Saudi Arabia and other countries are all ready to give money, but all of them say we need to go to the IMF first.”
Imran Khan, the former Prime Minister of Pakistan, cut and frozen fuel prices, thereby halting the $6 billion rescue package. To deal with all-time high imports, his successor Shehbaz Sharif, who entered office in April, prohibited luxury imports, and the central bank boosted borrowing prices more than expected this month.
Ismail estimates that Pakistan would require $36 billion to $37 billion in funding for the fiscal year that begins in June. A agreement with the IMF would make it easier to get funding from other sources, including as the World Bank and friendly countries like China.
Ismail has ruled out borrowing money from the global bond market or foreign commercial banks that have previously provided short-term loans. JPMorgan Chase & Co., Citigroup Inc., Standard Chartered Plc, and Credit Suisse Group AG are claimed to have been chosen by the country to supervise any bond sale.
Pakistan will be able to expand its foreign exchange reserves to over $15 billion next fiscal year, up from around $10 billion this fiscal year. According to statistics provided by Bloomberg, Pakistan has a $3.2 billion dollar debt due this year, the greatest amount in the next decade.
Acting central bank governor Murtaza Syed assured investors and experts last week that Pakistan’s funding needs will be met if the country obtains the IMF programme.