- AFP
- 2 Hours ago
Pakistan seeks $11 bn aid from China and Saudi Arabia for economic stability
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- Web Desk
- Sep 29, 2023
ISLAMABAD: Pakistan is seeking approximately $11 billion in bilateral assistance from China and Saudi Arabia as part of efforts to expand its tax revenue sources, including the retail, agricultural, and real estate sectors.
According to Dawn.com, the caretaker government is also continuing its crackdown on illegal currency movements to address external and domestic resource gaps, ensuring that the International Monetary Fund (IMF) program remains on course for economic stability until the elected government takes office.
As per the media reports, Caretaker Finance Minister Dr. Shamshad Akhtar outlined these objectives during a detailed policy statement before the Senate Standing Committee on Finance and Revenue in Islamabad.
She discussed the partial transfer of the Benazir Income Support Program (BISP) to provinces as required by the IMF, emphasising the government’s commitment to fiscal reforms aligned with the IMF program. Talks with the IMF are set to commence by the end of October to facilitate the disbursement of a $700 million loan installment.
Dr Akhtar noted that while the caretaker government had limited scope for deep structural reforms, it was determined to implement reforms integral to the IMF program to ensure economic stability and continuity.
Addressing the external financing gap, Dr Akhtar emphasised the need for additional financing while highlighting efforts to secure disbursements from the project pipeline and policy-based financing from multilateral institutions.
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She mentioned that external flows would improve with the anticipated $700 million from the IMF, and Pakistan had requested bilateral financing of around $11 billion from China and Saudi Arabia, along with a Saudi oil facility.
To meet external financing requirements, Pakistan is also working to secure concessional funding from multilaterals, including the World Bank, Asian Development Bank, and Islamic Development Bank, totaling $6.3 billion. Dr Akhtar acknowledged that the IMF had already approved $3 billion, and additional bilateral assistance of approximately $10 billion was expected.
Meanwhile, she highlighted the commitment to increase State Bank’s reserves and cautioned about external stability risks posed by rising international commodity prices, such as Brent crude oil prices, which surged to $95 per barrel in September, marking a 27 per cent increase from $74 per barrel in June.
Furthermore, Dr Shamshad Akhtar underscored the need to amend laws to bring the retail, agriculture, and real estate sectors effectively into the tax net. She also stressed the importance of resolving pending cases to generate an additional Rs3 trillion in revenue.
She noted the gap between the demand and supply of dollars and mentioned the decline in workers’ remittances, highlighting the government’s actions to stabilize the exchange rate.
The minister also attributed the rupee’s devaluation as a major factor contributing to high inflation last year and underscored efforts to address speculative activities in the exchange market, resulting in a stronger local currency.