Debt-ridden Pakistan seeks $11 billion aid from China, Saudi Arabia
Pakistan's caretaker government is reportedly in talks with China and Saudi Arabia to secure $11 billion in aid, aiming to keep the International Monetary Fund (IMF) bailout program on track and avoid an economic crisis. According to DAWN newspaper, caretaker finance minister Dr. Shamshad Akhtar shared that the government is working on an economic revival blueprint. The goal is to meet IMF conditions and unlock a $700 million loan installment, with discussions set to begin by the end of October.
Pakistan's ongoing struggle to bridge financing gap
Despite Pakistan's efforts to secure aid, the country's financing needs still exceed available funding. The government hopes that working together with stakeholders will attract project pipeline disbursements and revive policy-based financing from various international bodies. Akhtar told the Pakistan-based newspaper, "To meet the external financing requirements, we are working to secure concessional funding from multi-laterals (World Bank, Asian Development Bank, Islamic Development Bank) of $6.3 billion."
Risks are posed by rising international commodity prices
The finance minister also pointed out the rising international commodity prices, particularly Brent crude oil, which spiked to $95 per barrel in September, as a significant risk to Pakistan's external stability. The caretaker government is not only seeking financial assistance from external sources but also focusing on domestic measures such as amending tax laws to effectively include retail, agricultural, and real estate sectors.
Efforts being made to expand tax net, resolve pending cases
In addition to seeking financial aid from China and Saudi Arabia, Pakistan's caretaker government is pushing for changes in tax laws to effectively include retail, agricultural, and real estate sectors. This move aims to generate an additional Rs. 3 trillion by resolving pending court cases. The government is also continuing its crackdown on illegal currency movements as part of its efforts to address the country's financial challenges.
IMF has a role to play in Pakistan's economic stability
The IMF has already agreed, in principle, to a nine-month Stand-by Arrangement worth about $3 billion with Pakistan in June. Fulfilling commitments under the IMF program is crucial for Pakistan's economic continuity, as emphasized by Akhtar. At the end of April this year, the Pakistan government's total debt stood at Rs. 58.6 trillion, according to the country's central bank.
