Following an IMF financial rescue and assistance from other countries, Pakistan’s foreign exchange reserves have risen to a nine-month high of $8.73 billion. Pakistan’s external debt, which has grown by over $100 billion, is still a problem.
Following a new financial rescue from the International Monetary Fund (IMF), Pakistan’s foreign exchange reserves have soared to a nine-month high.
As of July 14, the nation’s reserves had nearly doubled to $8.73 billion, thanks to contributions from the IMF and friendly countries like Saudi Arabia and the UAE. Since holding $8.76 billion in reserves in October, this is the greatest reserve level.
According to Bloomberg, Pakistan is attempting to stabilize its balance of payments situation in the wake of a 13% reduction in exports and a 25% decline in foreign direct investment over the previous year. As a result, financial aid worth about $4.2 billion was received last week.
Pakistan has received a $600 million commercial loan from China’s Exim Bank, which has contributed to the increase in foreign exchange reserves. The reserves will be updated the following week.
According to the central bank, Pakistan’s total foreign exchange reserves currently total $14.1 billion after the recent inflows and the $5.34 billion held by local commercial banks.
The financial assistance from the IMF has helped Pakistan avoid a potential default and given the departing government of Prime Minister Shehbaz Sharif, whose tenure is coming to an end next month, a much-needed respite.
Despite the recent financial improvement, Pakistan still has problems with its $100 billion external debt. If the nation doesn’t achieve the objectives of the bailout program, the IMF has issued a warning that its debt may become unmanageable.
The paper also emphasizes how there are now more threats to debt sustainability because there are fewer international financing choices and more investment is needed.
According to a 120-page assessment previously released by the IMF, Pakistan will require a new IMF program as well as assistance from other foreign lenders after the current election cycle and the present standby arrangement.
According to the Dawn newspaper, the research examines Pakistan’s macroeconomic future and highlights the need for more financial support to alleviate the nation’s financial crisis.
