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Pakistan's FY24 Gross External Financing Needs to Exceed $28 Billion, IMF Report Reveals

According to a recent report by the International Monetary Fund (IMF), Pakistan is projected to have gross external financing needs amounting to $28.361 billion for the fiscal year 2023-24 (FY24), equivalent to 8 percent of its GDP. The IMF also highlighted that the country's external financing requirement is expected to rise to $30.4 billion in FY24-25. While the IMF's Staff Report mentioned that the financing needs are fully covered by the Stand-By Arrangement (SBA) program, it emphasized the presence of exceptionally high risks.

To address these financing needs, Pakistan has received commitments for additional funding from bilateral and multilateral partners, including Saudi Arabia, the UAE, and the Islamic Development Bank.

These commitments, along with pledges made at the Geneva conference and financing from other sources, are crucial to meet the country's public gross external financing needs in FY24.

However, the report cautioned that financing risks remain significantly high due to factors such as the large external rollover needs of the public sector, a substantial current account deficit, challenges in Eurobond issuance, and limited reserve buffers.

The report further noted that Pakistan's ability to repay the IMF is subject to considerable risks, dependent on effective policy implementation and timely external financing. The IMF's exposure to Pakistan is significant, and it stressed the importance of restoring external viability through strong policy implementation beyond the proposed SBA.

The authorities emphasized that they have secured adequate financing from international partners to support their economic reform program.

Based on current projections and policy measures outlined in the IMF report, Pakistan's gross external financing needs for FY24 are estimated to be approximately $28.4 billion, including the current account.

This amount includes around $14.5 billion for debt amortization to multilateral, bilateral, and commercial creditors. The authorities highlighted that they have managed to secure $10 billion through rollovers and refinancing of maturing debt, as well as $5.6 billion in additional financing commitments from various sources, in line with program financing commitments.

Despite the financing assurances, the report emphasized the importance of mitigating risks associated with delayed reforms, high public debt and financing needs, limited reserves, declining inflows, and socio-political factors.

Uncertainty regarding global economic and financial conditions further adds to these risks. The successful execution of credible financing commitments is crucial to address these challenges and ensure Pakistan's repayment capacity and debt sustainability.

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Pakistan's FY24 Gross External Financing Needs to Exceed $28 Billion, IMF Report Reveals

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