External Financing
Pakistan is facing a significant financial challenge as the International Monetary Fund (IMF) emphasizes the country’s need for external financing amounting to $71.88 billion over the next three years. The IMF raised concerns about high external financing risks and the possibility of the government resorting to expensive domestic borrowing in case of a shortfall or slowdown in external funding.
According to documents, Pakistan’s external financing needs include $24.96 billion in the current fiscal year, $22.24 billion in 2025, and $24.67 billion in 2026. The IMF underscored that the country’s debt burden is unsustainable, and addressing this challenge necessitates substantial financing from international institutions and various countries.
The government has assured the IMF of its commitment to securing external financing arrangements. However, the IMF warns that a shortfall in external funding could lead to an increased dependence on costly local loans, reducing the credit capacity for the private sector.
The report also highlights potential issues in Eurobond issuance, Sukuk bonds, and foreign exchange reserves if there are delays in expected financial inflows.
The IMF’s analysis suggests that Pakistan may require loan rollovers from friendly countries to manage these financial pressures. The report hints at heightened pressure on exchange rates due to global inflation, tightening financial conditions, and geopolitical conflicts. As Pakistan grapples with these economic challenges, securing support from international partners becomes crucial to ensuring financial stability and sustainable economic growth.
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