ISLAMABAD: To address its external financing gaps, Pakistan is planning to raise up to $4 billion from Middle Eastern commercial banks by the next fiscal year, State Bank of Pakistan (SBP) Governor Jameel Ahmad said.
Governor Ahmad expressed confidence in the government’s ongoing efforts to secure rollovers of $12 billion in loans from China, Saudi Arabia, and the United Arab Emirates (UAE).
The SBP governor also revealed that Pakistan is in the “advanced stages” of securing an additional $2 billion in external financing, which is crucial for the IMF’s approval of a $7 billion bailout program.
Moreover, the government has requested an extra $1.2 billion loan from Saudi Arabia to help bridge a $2 billion financing gap, sources indicated.
Pakistan and the IMF reached a preliminary agreement on the bailout program in July, contingent on the IMF’s executive board approval and “timely confirmation of necessary financing assurances from Pakistan’s development and bilateral partners.”
However, the IMF’s schedule of Executive Board meetings, released on August 26, does not include Pakistan until September 4, 2024.
When asked about monetary policy, Ahmad noted that recent interest rate cuts in Pakistan have had the intended effect, with inflation continuing to slow and the current account remaining stable despite the rate reductions.
Pakistan’s annual consumer price index inflation dropped to 11.1% in July, down from over 30% in 2023.
“The Monetary Policy Committee will review all these developments,” Ahmad said, emphasizing that future rate decisions cannot be predetermined.
The central bank has cut interest rates in two consecutive meetings, reducing them from a historic high of 22% to 19.5%. The next review of monetary policy is scheduled for September 12.
“Now we have to focus on growth and other related areas because those are also equally important for job creation and other socioeconomic issues,” Ahmad stated.
He added that the central bank’s primary mandate is to ensure price and financial stability before shifting its focus toward promoting economic growth.
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