Now that the government is well on its way to finalising the IMF talks and working towards getting the bailout programme reinstated once more, the government can also begin approaching ally states, lending partners, and other international stakeholders to try and secure more funds for the next year. A $2.3 billion loan agreement with a Chinese consortium, announced by Finance Minister Miftah Ismail on Wednesday, indicates that the government is indeed exploring multiple avenues for financing.
This injection is reportedly going to be directed towards shoring up our foreign reserves, which is extremely important in the current period of stagnation and low growth. On Tuesday, the State Bank of Pakistan announced that its liquid reserves stood at $8.99 billion. Keeping our reserves at a stable level allows for us to make our high import payments. A drastic drop in the reserves would affect our ability to make payments, not to mention that it would lower the value of our already battered Rupee.
Going forward, one of the key tasks for the finance team of the government in the next year should be to shore up our foreign reserves. This will be crucial in stablising the Rupee and bringing up its value if the government also looks to adjust other policies alongside.
The current bleak situation regarding inflation and economic downturn is not likely to go away immediately, but an increase in the value of the rupee will provide immediate relief in terms of fuel costs and imported goods such as edible oil and tea. The government can use this relief and look to bring some sort of price stabilization in other sectors too, as a result.
However, time is of the essence. The government’s move to make this financing option available for us in record time—even before the IMF deal has been officially reinstated—is nothing short of an achievement. Similar action must be taken with other lenders and stakeholders as well.