Pakistan's recent financial aid and investment partnerships, including with the IMF, Saudi Arabia, UAE, and China, provide temporary relief from economic challenges, but the country must address issues such as low growth, high inflation, unemployment, and limited foreign exchange reserves through deregulation, investment in education and technology, tax reform, privatization, and political stability to achieve lasting prosperity.
Pakistan is expecting $60-70 billion in foreign investment over the next three to five years through the Special Investment Facilitation Council, according to interim prime minister Anwaar-ul-Haq Kakar.
The World Bank emphasizes the importance of collaboration between federal and provincial governments in Pakistan to secure the disbursement of $2 billion in program and project loans, contingent on meeting agreed-upon indicators, for the current fiscal year.
Pakistan International Airlines (PIA) has secured a Rs17 billion bank loan, allowing it to pay salaries, operate flights smoothly, and fulfill its financial obligations.
The Pakistani government has issued new debt of over Rs2.5 trillion in the first three months of the current financial year to address its rising fiscal deficit, indicating a reliance on domestic sources as external financing decreases and revenues decline.
Pakistan is expected to receive approximately $3.4 billion out of the $10.9 billion pledged by the international community for flood victims, with a major chunk of the funding going towards commodities financing and an oil facility, leaving a net amount of $3.4 billion for the execution of development projects in the flood-affected areas.
The Inter-American Development Bank (IDB) aims to expand its lending capacity to $112 billion over a decade with fresh capital from shareholders, according to IDB President Ilan Goldfajn, who also emphasized the need for multilateral coordination and the transformation of green bonds into indicator-based financial instruments.
Pakistan's central bank has met its forward book target of $4.2 billion set by the IMF and is positioned well to meet additional targets, while an IMF delegation is set to evaluate the country's performance and potentially approve the next installment of $700 million in financial assistance.
Pakistan's external financing needs are significant and its foreign exchange reserves coverage is precarious, warns the IMF, who also highlights the growing risk to Pakistani banks from a large exposure to government debt.
Nigeria ranks fourth in the World Bank's top 10 IDA borrowers list with a debt of $14.3 billion, and it is the highest in Africa.
Pakistan's ability to generate dollar loans has decreased in the past two months, resulting in the depreciation of the local currency against the US dollar. In the first quarter of the current fiscal year, Pakistan secured $3.52 billion from multilateral and bilateral creditors, but commercial loans and international bonds have not been successful. The government must secure $14.1 billion in the remaining three quarters to maintain comfortable foreign exchange reserves and avoid a balance-of-payments crisis.
