The International Monetary Fund (IMF) has projected Pakistan’s grossexternal financing needs at $28.361 billion for fiscal year 2023-24 (FY24),which is 8 percent of GDP.
The IMF in its Staff Report noted that the country’s external financingneed would be $30.4 billion in fiscal year 2024-25. The Fund stated thatthe SBA program is fully financed but with exceptionally high risks.Financing commitments from bilateral and multilateral partners will helpcover public gross external financing needs in FY24 and the reserveposition at end-FY24 is consistent with program objectives.ALSO READ
Bilateral creditors are expected to maintain their exposure to Pakistan inline with program commitments and there are commitments for $3.7 billion ofadditional financing expected from Saudi Arabia and the UAE. These togetherwith commitments from multilateral institutions, including the IslamicDevelopment Bank, and other pledges at the Geneva conference provide thenecessary financing assurances.
Nonetheless, financing risks remain exceptionally high, arising from largepublic sector external rollover needs, a sizable current account deficit, adifficult external environment for Eurobond issuance given recentdowngrades and high spreads, and limited reserve buffers to help cover thefinancing needs in case of delays in scheduled inflows.
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The report noted that Pakistan’s capacity to repay the Fund is subject tosignificant risks and would critically depend on policy implementation andtimely external financing. The Fund’s exposure reaches SDR 6,123 million(or 301 percent of quota and about 108 percent of projected gross reservesin end-September 2023) with purchases linked to the request.
With the completion of all purchases under the arrangement, the Fund’sexposure would peak at SDR 6,673 million in March 2024 (or 329 percent ofquota and about 109 percent of projected gross reserves in end-March 2024).