By Gibran Naiyyar Peshimam and Ariba Shahid
It is unclear whether Pakistan will successfully complete its IMF review or if it will be able to restructure its bilateral debt, according to its finance minister. However, he reiterated that he would not approach Paris club nation creditors or seek haircuts.
After releasing the 2023-24 budget, Ishaq Dar told reporters, “We’ll see how things go,” referring to Pakistan’s ongoing talks with the IMF about its stalled bailout funds.
Dar said, “In either case, we will talk to bilateral creditors.”.
Pakistan’s IMF program runs out this month with about $2.5 billion in funds still to be released as it struggles to reach an agreement with the lender. There is record inflation, fiscal imbalances and a critical level of reserves that barely cover a month’s imports in the country.
As of fiscal year 2021, Pakistan owed $37 billion to bilateral creditors, of which $23 billion is owed to China.
During a news conference on Saturday, Dar said 3.5% economic growth was a “realistic target” and “on the low end”.
As for Pakistan’s next IMF review, the country’s ninth, Dar said he was “hopeful” it would pass, but he “didn’t think” it would.
According to the budget, Pakistan’s gross domestic product (GDP) will grow by just 0.29% this year, while the fiscal deficit will be 6.54%.
In his budget speech on Saturday, Dar said there was no more room to reduce the fiscal deficit target.
For Pakistan to unlock funding under its long-delayed ninth IMF review, it must secure firm and credible financing commitments to close the $6 billion gap in its foreign reserves.
Saudi Arabia and the United Arab Emirates have committed only $4 billion to the project.
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