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Pakistan sees $3.8bn inflows in four months of FY24 amid forex crunch

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6 months ago

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  • IMF inclined for a downward revision of forex reserves projection.
  • EAD in its figures does not include inflows from IMF.
  • EU and EIU yet to disburse any loan amount in current fiscal year.

ISLAMABAD: Amid dwindling official foreign exchange reserves despite signing a $3 billion IMF programme, Islamabad has secured $3.8 billion from multilateral and bilateral creditors in the first four months (July-October) period of the current fiscal year 2023-24, The News reported Tuesday.

The official figures of the Economic Affairs Division (EAD) did not incorporate the $1.2 billion disbursed by the IMF after approval of the $3 billion Standby Arrangement (SBA) program. So, the total dollar inflows in the shape of loans totalled $5 billion.

Now the IMF also seems inclined to downward revise the projection on account of gross foreign exchange reserves as it might witness a reduction from $12.9 billion to around $11.6 to $11.9 billion by the end of the ongoing financial year. 

The government has projected total foreign loans of $17.619 billion for the current fiscal year. 

In the official projection, the government had included $2.4 billion from the IMF for the current fiscal year. Although, Pakistan had signed a $3 billion SBA programme out of which $1.2 billion was so far disbursed by the Fund in August 2023. Now another IMF tranche of $700 million was expected to be disbursed after securing approval of the Fund’s executive board. 

In this scenario, all projections on account of Gross Official Reserves, Net International Reserves (NIR), Current Account Deficit and dollar inflows in the shape of foreign loans were changed for the current fiscal year.

According to the disbursement of foreign loans received by Pakistan showed that Pakistan received $318.1 million during October 2023. 

Islamabad had secured $3.52 billion in the first three months (July-September) period of the current fiscal year. Pakistan had obtained a guaranteed loan of $508.34 million. 

The disbursement of loans from the Asian Development Bank (ADB) stood at $87.5 million in the first four months of the current fiscal year. From AIIB, the total disbursed loan amount stood at $27.86 million. The European Union (EU) and EIU have not disbursed any loan amount so far in the current fiscal year. 

The World Bank’s IDA loan disbursement stood at $303.43 million and the IBRD loan of $67.28 million. The IFAD has disbursed $11.43 million, IsDB $100 million and OPEC Fund $0.01 million in the first four months of the current fiscal year.

The multilateral creditors in totality disbursed $597.49 million during the first four months of the current fiscal year. All bilateral creditors disbursed $435 million in the first four months out of which the Kingdom of Saudi Arabia disbursed $400 million for the oil facility during the July-Oct period of the current fiscal year.

The government also received $2 billion in the shape of time deposits from KSA in the current fiscal year. The government has not generated any international bonds so far in the current fiscal year. 

Minister for Finance Dr Shamshad Akhtar had already announced the shelving of the plan to raise $1.5 billion in international bonds. Pakistan received $306.26 million in the shape of Naya Pakistan Certificates in the first four months. 

The foreign exchange reserves held by the SBP had declined from $8.1 billion on July 23, 2023 to $7.3 billion on November 10, 2023 mainly because of repayments on external debt fronts during this period.

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Pakistan’s gold prices are still declining; see the most recent

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5 days ago

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The price of 10-gram gold reduced by Rs943 to settle at Rs207,733, while the price of gold dropped by Rs1200 to close at Rs242,300 a tola, according to the Sindh Sarafa Jewellers Association.

In the global market, the price of the precious metal fell by $10 to $2,349 per ounce, resulting in losses.

At 04:48 GMT, the spot price of gold had dropped by 0.2% to $2,354.77 per ounce. In the previous session, prices reached a two-week high.

American gold futures dropped 0.6% to $2,361.

Spot silver decreased by 0.4% to $28.03 per ounce, while palladium remained steady at $978.03 and platinum decreased by 0.1% to $992.89.

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Pakistan and the IMF begin talks for a new loan.

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5 days ago

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Pakistan is requesting a $6 to $8 billion bailout package from the international lender over the next three to four years to address its financial troubles.

A mission team led by Nathan Porter, the IMF’s Mission Chief in Pakistan, is meeting with a Pakistani delegation led by Finance Minister Muhammad Aurangzeb.

According to sources familiar with the situation, Islamabad may face more difficult options, such as raising power and gas bills.

Mr. Aurganzeb informed the IMF team that the country’s economy has improved as a result of the IMF loan package, and Islamabad is ready to sign a new loan programme to further develop.

The IMF mission expressed satisfaction with Islamabad’s efforts to revive the country’s struggling economy.

The IMF praised Pakistan’s economic growth in its staff report earlier this week, but warned that the outlook remains challenging, with very high downside risks.

The country nearly avoided collapse last summer, and its $350 billion economy has stabilized since the end of the last IMF program, with inflation falling to roughly 17% in April from a record high of 38% last May.

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Business

Petrol prices are likely to drop significantly beginning May 16.

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5 days ago

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According to sources, the government is set to decrease petrol prices by Rs 14 per litre and diesel prices by Rs 10 on May 16 for the next fortnight’s revision.

Last month, the government reduced the price of fuel and high-speed diesel by Rs5.45 and Rs8.42 per fortnight, respectively.

The current fuel price is Rs288.49 per litre, while the HSD price is Rs281.96.

Meanwhile, oil prices fell further on Monday, as signs of sluggish fuel consumption and comments from U.S. Federal Reserve officials dimmed optimism for interest rate reduction, which may slow growth and reduce fuel demand in the world’s largest economy.

Brent crude prices down 25 cents, or 0.3%, to $82.54 a barrel, while US West Texas Intermediate crude futures fell 19 cents, or 0.2%, to $78.07 per barrel.

Oil prices also declined on signals of poor demand, according to ANZ analysts, as gasoline and distillate inventories in the United States increased in the week before the start of the driving season.

Refiners throughout the world are dealing with falling diesel profitability as new refineries increase supply and warm weather in the northern hemisphere and weak economic activity reduce demand.

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