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Pakistan to get $4 billion from friendly countries to shore up reserves: Finance Minister Miftah Ismail

Depleting reserves, a widening current account deficit and the rupee’s depreciation against the dollar have left the nation facing a balance-of-payments crisis.

July 17, 2022 05:49 pm | Updated 05:49 pm IST - Islamabad

A woman prices groceries from a shopkeeper at a market, in Karachi, Pakistan, on July 14, 2022. The International Monetary Fund said Thursday it had reached a preliminary agreement with Pakistan to revive a $6 billion bailout package for this impoverished Islamic nation, which has been facing a serious economic crisis since last year.

A woman prices groceries from a shopkeeper at a market, in Karachi, Pakistan, on July 14, 2022. The International Monetary Fund said Thursday it had reached a preliminary agreement with Pakistan to revive a $6 billion bailout package for this impoverished Islamic nation, which has been facing a serious economic crisis since last year. | Photo Credit: AP

Pakistan is likely to get $4 billion from friendly countries this month to bridge a gap in foreign reserves highlighted by the International Monetary Fund, Finance Minister Miftah Ismail has said, two days after the cash-strapped nation reached a deal with the global lender for the revival of a $6 billion loan facility.

Mr. Ismail on Saturday referred to the shortfall in foreign reserves highlighted by the International Monetary Fund (IMF), Dawn newspaper said.

“As per the IMF, there is a $4 billion gap,” the minister said.

“We will, God willing, fill this gap in the month of July,” he said.

“We think that we will get $1.2bn in deferred oil payment from a friendly country. We think that a foreign country will invest between $1.5bn to $2bn in stocks on a G2G (government-to-government) basis, and another friendly country will perhaps give us gas on deferred payment and yet another friendly country will make some deposits," he said without naming the friendly nations.

Also read: Explained | Pakistan’s economic muddling and the IMF challenge

Pakistan on Thursday reached a preliminary staff-level agreement with the IMF for the revival of the $6 billion loan facility.

The agreement paves the way for the release of the much-awaited $1.18 billion loan tranche that had been on hold since earlier this year.

The board is also considering adding $1 billion to a $6 billion programme agreed in 2019, Dawn newspaper reported.

Depleting reserves, a widening current account deficit and the rupee’s depreciation against the dollar have left the nation facing a balance-of-payments crisis.

Without the IMF deal, which should open up other avenues for external finance, Ismail said the country could have headed towards default.

He said the country would also get around $6 billion from multilateral lenders this fiscal year, including $3.5 billion from the Asian Development Bank and $2.5 billion from the World Bank.

He said $400 million to $500 million was also expected from the Asian Infrastructure Investment Bank while the Islamic Development Bank was also likely to increase the funding.

He hoped the rupee would strengthen against the dollar soon after the IMF agreement was finalised, which was expected in the current month.

Besides, he said the government was aiming to curb energy imports to $2.7 billion this month from $3.7 billion last month, which was also expected to take some pressure off the local currency, as per the Dawn report.

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