In an effort to close any gaps in external funding, Pakistan wants to collect up to $4 billion from Middle Eastern commercial banks by the end of the next fiscal year, the governor of the State Bank of Pakistan (SBP) told Reuters on Tuesday.
Governor of the State Bank of Pakistan Jameel Ahmad stated in a comprehensive interview that this was his first with a media outlet since taking office in 2022 that Pakistan was also in the “advanced stages” of obtaining the $2 billion in additional external financing needed for the International Monetary Fund (IMF) to approve a $7 billion bailout program.
Subject to approval by the IMF’s executive board and the nation receiving “timely confirmation of necessary financing assurances from Pakistan’s development and bilateral partners,” Pakistan and the IMF came to an agreement on the loan program in July.
Regarding monetary policy, Ahmad responded that Pakistan’s recent interest rate reductions have had the intended impact, as the country’s current account is still under control and inflation is still declining.
In July, Pakistan’s annual consumer price index inflation rate was 11.1%, down from 2023 highs of more than 30%.
Ahmad stated that all of these developments will be reviewed by the Monetary Policy Committee and that future rate decisions could not be predetermined.
The central bank of Pakistan lowered interest rates for two consecutive meetings, from a record high of 22 percent to 19.5 percent. On September 12, they will meet once more to discuss monetary policy.
“Growth and other related areas are now our main priorities because they are equally important for job creation and other socioeconomic issues,” Ahmad stated.
Before focusing on growth, he said, the central bank’s job was to maintain price and financial stability.
It was previously reported that the nation was in negotiations with banks in the Middle East to obtain the about $4 billion in loans needed to cover its external debt during the current fiscal year.
Pakistan has budgeted over $20 billion in foreign borrowing for the current fiscal year, in addition to a separate $3 billion rollover from the UAE that was reported for the balance of payments. Pakistan’s reserves were predicted to increase to roughly $19–20 billion by the conclusion of the current fiscal year with this level of borrowing.
About $4 billion of the $20 billion projection is expected to be handled through foreign commercial borrowing and another $1 billion through international bonds during the current fiscal year.
