ISLAMABAD: Pakistan will have to obtain another IMF bail out package in 2023 because of estimated requirements of about $30 billion for the next financial year, 2022-23.
The present IMF programme will expire in Sept 2022 and the widening trade deficit and current account deficit in the ongoing fiscal year will create a wide fiscal gap in 2022-23, leaving the government with no other choice but to approach the IMF once again.
According to senior officials of Economic Affairs division, the government will be required to complete two more reviews, 7th and 8th by September 2022, for the completion of Extended Fund Facility (EFF) programme of IMF. This exercise will not only revive but keep on track the $6 billion EFF after completion of the sixth review in next couple of weeks.
According to officials, an alternate plan to manage is essential for the financing of $45 to $50 billion over the next 18 months if all the state institutions skip the IMF loan on a permanent basis.
Pakistan can avoid IMF loan in case the external economic indicators are managed very well to avoid wide gaps. Additionally, enhancing remittances, exports and foreign investments will also be vital to stay away and safe from IMF.
Meanwhile, the IMF has assessed that Pakistan’s gross financing requirement will be standing at $28 billion in the next fiscal year 2022-23 but keeping in view the higher current account deficit projections, it is expected that the overall external financing requirement will cross the $30 billion mark in the next fiscal year, Geo TV reported today.
Now the question arises of how the country is going to manage the external financing of $45 to $50 billion over the next 18-month period (Jan-June) 2021-22 and next fiscal year 2022-23.
The National Security Policy recently approved by the federal cabinet recommended not to get loans from the IMF and other multilateral creditors but keeping in view the existing debt trap, it seems impossible to manage the external financing requirements without the support of the IMF programme.
The external debt servicing requirement is projected to touch $13 to $13.5 billion in the next budget 2022-23 and the current account deficit may not go down from $12 to $14 billion. The current account deficit for the ongoing fiscal year 2021-22 is projected to remain around $15 to $16 billion, while the external debt repayments, including principal and mark-up, will be standing at $12.4 billion.
The current account deficit stood at $7.1 billion for the first five months (July-Nov) period of the current fiscal year and was all set to hover around $1.5 to $2 billion for December 2021, so it might go close to $9 billion for the first half (July-Dec) period of the ongoing fiscal year 2021-22.
