Finance Minister Miftah Ismail took to his twitter handle to announce the ‘good news’ on Thursday that Chinese banks have agreed to refinance Pakistan with $2.3 billion funds which will “shore up Pakistan’s Foreign exchange reserves.”
The finance minister further informed that after some routine approvals from both sides, the inflow is expected ‘shortly’ which will help in bolstering country’s foreign reserves.
The country is facing an unstable economic situation due to dely in the re-establishment of IMF programme and this news certainly appears as a life-line in this scenario and a massive relief to economic policy makers who observed the fall of foreign exchange reserves held by the State Bank Of Pakistan drop down to $10.09 billion, with this level staying at less than 1.5 months of import covers.
This agreement with Chinese Banks is expected to support the reserves and enable the country to make payments which will eventually lead some support to rupee as well which has lost over 25% since the start of ongoing fiscal year.
The News reported on Thursday that Pakistan’s delayed IMF program’s re-establishment depends on government’s ability to make fiscal adjustments by increasing revenues or reducing expenditures of about 2.5 % of the GDP or Rs2,000 billion in the upcoming budget of 2022-2023.
IMF urges that the government must exhibit its commitment of implementing the “reform agenda” by ending petrol The subsidies of Rs39 per liter and diesel subsidies of Rs53 per liter, raise electricity excise by RS8 per unit by increasing base tariff and fuel price adjustments, and 20% on average of gas tariffs must be increased under the advice.