ISLAMABAD - Pakistan’s foreign exchange reserves have started increasing after receiving first tranche worth $991.4 million from the International Monetary Fund (IMF).

The State Bank of Pakistan (SBP) has received IMF first tranche of $991.4 million which is equivalent to SDR 716 million under the under Extended Fund Facility (EFF). The IMF’s Executive Board on July 3 had approved a three-year bailout package worth $6 billion for Pakistan. The inflow of first tranche has increased the country’s foreign exchange reserves to above $15 billion.

The recent inflow of foreign loans had started from the week ended on 28 June 2019 when SBP had received inflow of $500 million from Qatar as placement of funds.  Qatar had committed to place $3 billion in SBP’s account on the request of government of Pakistan. Similarly, the deferred oil payment facility from Saudi Arabia had also started from July 2019. The Saudi Arabia would provide oil worth $3.2 billion on deferred payment facility for one year, which would ease pressure on the country’s foreign exchange reserves.

Pakistan would receive $6 billion from the IMF in next three years. Meanwhile, the Asian Development Bank (ADB) has planned to support Pakistan with indicative lending of up to $10 billion for various development projects and programmes during the next five years. The ADB plans to provide about $2.1 billion out of $3.4 billion funds to support Pakistan’s reform and development programmes during fiscal year 2019-20.

Pakistan’s external debt will peak to $130 billion: IMF

The incumbent government would continue to borrow in its remaining four years of its tenure. The International Monetary Fund (IMF) has said that Pakistan’s external debt will peak to $130 billion. The volume of external debt was $95.4 billion when the PML-N left the government in May 2018. However, the Fund projected that volume of external debt would enhance to $130 billion by the end of fiscal year 2022-23, showed a staff-level report that the IMF released on Monday.

According to the Fund, the country’s debt is expected to reach 80.5 percent of GDP in 2020, partly reflecting currency depreciation, but to fall sharply to 67 percent of GDP by FY 2024. Public debt excluding guarantees will come down to 64 percent of GDP. Gross financing needs are expected to decline sharply to 23 percent of GDP in FY 2020 and further to 16.7 percent by FY 2024, reflecting the reprofiling of short term domestic debt held by the central bank. Still, both the debt level and the gross financing needs are just above the empirically determined risk benchmarks shown by the heatmap.