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coronavirus
Coronavirus
VERY HIGH
Source: covid.gov.pk
Pakistan Deaths
29,037
824hr
Pakistan Cases
1,338,993
5,47224hr
Sindh
509,308
Punjab
455,499
Balochistan
33,744
Islamabad
112,557
KPK
182,619

Former finance minister Dr Hafiz Pasha has said that the recently-announced $4.2-billion Saudi Arabia financial support package would provide much-needed assistance to the economy, but the risk of trade deficit and external financing persists.

Pakistan's external financing needs have increased exponentially this year due to the rise in commodity prices in the international market, said Pasha while talking to a private channel.

“The trade deficit of Pakistan in FY21 stood at $1.8 billion, however, in the first quarter of this fiscal year alone the trade deficit has increased to $3.4 billion, and there is a risk that by the end of this fiscal year the trade deficit would reach over $13 billion.

“Secondly, we have to make debt repayments to the tune of $10-11 billion this year, which accumulate to $24 billion dollars, so from wherever we get the support it would be very helpful,” added Pasha.

WB says inflation to edge up in FY22

He said the financial support package has led to some appreciation of the Pak rupee against the US Dollar, and if the situation stabilises it is expected that the inflation rate would reduce.

The Saudi Fund for Development (SFD), on Tuesday night, announced the issuance of the Royal Directive to deposit an amount worth $3 billion into the central bank of Pakistan, “to help the Pakistani government support its foreign currency reserves and support it in facing the impacts of the coronavirus pandemic,” read a statement by the Saudi Press Agency (SPA).

Additionally, the SFD said that the royal directive was also issued to finance the oil derivatives trade with a total amount of $1.2 billion throughout the year.

“The appreciation in PKR value against the USD in the past two days is due to the Saudi finance package. Furthermore, the stock market was facing volatility, however, in the past two days, confidence has returned to the market.

"Advisor to Finance Shaukat Tarin has also said that talks with IMF are in final stages — and both of these developments have created confidence,” said Pasha.

Pakistan's rupee recovers 1.44% against US dollar as KSA support cools off market

After dropping to its lowest level on Tuesday earlier this week – when it closed over the 175 level for the first time in the inter-bank market – the rupee has shown strength against the US dollar. However, many still believe that the rupee appreciation is only one element of the overall issues facing the economy.

Similarly, the ex-finance minister said Pakistan’s oil and energy imports have increased significantly, and it is expected that the bill would reach $16-17 billion this year.

“Another concern is that dollar projections being made by international analysts say that by the end of this year oil prices would hit $100 dollars per barrel. If this happens Pakistan's oil import bill would inflate by $2-2.5 billion,” added Pasha.

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