Pakistan Requests Additional $2 Billion from IMF
Islamabad, Pakistan – Pakistan is seeking an extra $2 billion from the International Monetary Fund (IMF) to address the severe effects of climate change. This request will be made by Pakistan’s Finance Minister, Muhammad Aurangzeb, during the upcoming IMF meetings in Washington, DC, from October 21 to 26. The main sessions will occur from October 22 to 25.
Delegation and Concerns
Aurangzeb will lead a delegation including the finance secretary, economic affairs secretary, and the State Bank of Pakistan governor. The IMF has previously expressed concerns about Pakistan’s ability to repay its external debt, describing it as “fragile.” Pakistan’s external financing needs are projected to reach $62.6 billion over the next three years under the Extended Fund Facility (EFF) program, increasing to $110.5 billion over five years from 2024 to 2029.
Future Financial Needs
For the current fiscal year, Pakistan’s external funding needs are estimated at $18.813 billion, rising to $20.088 billion in 2025-2026 and $23.714 billion in 2026-2027. Even after the three-year program ends, high financial demands will persist, with $24.625 billion needed in 2027-2028 and $23.235 billion in 2028-2029.
IMF’s Warning
The IMF has warned that Pakistan’s debt repayment ability is at “major risk” and depends heavily on policy implementation and timely external financing. The Fund’s exposure could reach Special Drawing Rights (SDR) 6,816 million by September 2024, which is 336% of Pakistan’s quota. High public debt, low reserves, and sociopolitical factors could threaten policy execution and debt sustainability.
On September 25, the IMF’s Executive Board approved Pakistan’s 37-month Extended Fund Facility (EFF) agreement, valued at approximately $7 billion.
Doubts Revealed
Pakistan -: Pakistan is a country located in South Asia, sharing borders with India, Afghanistan, Iran, and China. It has a diverse culture and history.
IMF -: IMF stands for International Monetary Fund. It is an organization of 190 countries that works to promote global economic stability and provides financial assistance to countries in need.
Climate Change Impact -: Climate change impact refers to the effects of changes in the Earth’s climate, such as extreme weather, rising sea levels, and changes in rainfall patterns, which can affect people’s lives and the environment.
Finance Minister -: A Finance Minister is a government official responsible for managing a country’s financial policies, including budgeting, taxation, and economic planning. In this case, Muhammad Aurangzeb is the Finance Minister of Pakistan.
Debt Repayment Ability -: Debt repayment ability refers to a country’s capacity to pay back the money it has borrowed from other countries or organizations. It is important for maintaining financial stability and trust.
External Financing Needs -: External financing needs are the amount of money a country needs to borrow from other countries or international organizations to support its economy and development projects.
Public Debt -: Public debt is the total amount of money that a government owes to lenders. It can include loans from other countries, international organizations, or private investors.
Low Reserves -: Low reserves refer to a situation where a country has a small amount of foreign currency or gold saved up. This can make it difficult for the country to pay for imports or repay debts.