Pakistan secures $13bn-14bn in financial commitments, says Dar

Federal Minister for Finance and Revenue Ishaq Dar said that the government has secured financial commitments of around $13 billion to $14 billion from friendly countries to meet Pakistan’s financing needs.

“In the coming twelve months, Pakistan has to pay back $22 billion to meet its multilateral and commercial liabilities. The country’s current account deficit is projected to be around $10 billion-12 billion, which needs to be paid back,” Dar said in an interview with a private channel on Monday night.

“However, we have covered half the mileage ... we have secured financial commitments of around $13 billion to $14 billion, which includes commitments from China and Saudi Arabia,” said Dar, adding that he would visit UAE in the coming days.

He said that Pakistan's foreign exchange reserves include deposits from Saudi Arabia and UAE plus swaps from China.

Pakistan has been desperately seeking dollar inflows to meet its balance-of-payments needs. The foreign exchange reserves held by the State Bank of Pakistan (SBP) increased $1.47 billion on a weekly basis, clocking in at $8.91 billion as of October 28, 2022. Meanwhile, total liquid foreign reserves held by the country stood at $14.68 billion. Net foreign reserves held by commercial banks clocked in at $5.77 billion.

On talks with the International Monetary Fund (IMF), the finance minister reiterated that no measures would be taken that are not in public interest. “So far we are on track (with the IMF programme),” he said.

The IMF has expressed serious reservations against the recently-announced financial package of Rs1,800 billion for farmers and supply of electricity to five export-oriented sectors at Rs19.99/ kWh the cost of which has been estimated to be Rs110 billion, as the international lender seeks a reversal of both decisions by or compensate through new tax measures (mini-budget).

In the interview, Dar said that the agri-package was “justifiable” and the government remains in correspondence with the IMF.

On the exchange rate, Dar said market players are involved in speculative trading.

“Looking at the balance sheets of banks, they used to make a profit of less than Rs8 billion to Rs10 billion annually in exchange rate transaction fluctuations, which has risen to over Rs50 billion,” he said.

“There are two means of action, the regulator (SBP) can impose a penalty on such institutions, while the federal government could take fiscal actions. We are considering both of them,” said Dar.

The finance minister added that the SBP would be taking action against such players, the impact of which would be seen in coming days.