The International Monetary Fund (IMF) has highlighted Pakistan’s urgent need for external financing amounting to $71.88 billion over the next three years.
The global financier’s report, released on Monday, underscores the significant risks associated with securing this funding.
The IMF has expressed concerns about the potential consequences of a shortfall or slowdown in external funding, emphasizing that such a scenario would force the government to resort to expensive domestic borrowing.
According to the IMF documents, the country faces an immediate funding requirement of $24.96 billion for the current fiscal year alone.
Looking ahead, the financing needs to break down to $22.24 billion in 2025 and $24.67 billion in 2026, according to IMF documents. The report states clearly that Pakistan’s current debt burden is considered unsustainable, with high external risks looming on the horizon.
Addressing this challenge, the IMF contends, will necessitate substantial financial support from international institutions and various countries.
The government has reportedly assured the IMF of its commitment to securing external financing arrangements. The IMF warns that any shortfall in external funding would amplify the government’s reliance on costly local loans, thereby diminishing credit capacity for the private sector.
The IMF report also underscores potential complications related to delayed financial flows, pointing to challenges in Euro transactions, Sukuk bond issuances, and foreign exchange reserves. In response, the IMF suggests that Pakistan may need loan rollovers from friendly nations to navigate these hurdles successfully.
Furthermore, the report hints at heightened pressure on exchange rates, attributing the concern to global inflation, tightening economic conditions, and geopolitical conflicts.
As Pakistan tackles these economic challenges, the international community will be closely monitoring the government’s efforts to secure external financing and implement measures to ensure fiscal stability in the coming years.
