The Governor of the State Bank of Pakistan (SBP), speaking to Reuters on Tuesday, stated that Pakistan seeks to close its external financing shortages by raising $4 billion from Middle Eastern commercial banks by the next fiscal year.
Pakistan’s State Bank Governor, Jameel Ahmad, stated in a comprehensive interview he had with a media outlet for the first time since taking office in 2022 that his country was also in “advanced stages” of obtaining the $2 billion in additional external financing needed for the International Monetary Fund (IMF) to approve a $7 billion bailout program.
Subject to approval by the IMF executive board and the nation securing “timely confirmation of necessary financing assurances from Pakistan’s development and bilateral cooperation,” Pakistan and the IMF struck an agreement on the loan program in July. Regarding monetary policy, Ahmad responded that Pakistan’s recent interest rate reductions have had the intended impact, as the country’s current account is still under control and inflation is still declining.
In July, Pakistan’s annual consumer price index inflation rate was 11.1%, down from 2023 highs of more than 30%. Ahmad stated that all of these developments will be reviewed by the Monetary Policy Committee and that future rate decisions could not be predetermined. The Central Bank of Pakistan lowered interest rates for two consecutive meetings, from a record high of 22 percent to 19.5 percent. On September 12, they will meet once more to discuss monetary policy.
“Growth and other related areas are now our main priorities because they are equally important for job creation and other socioeconomic issues,” Ahmad stated. Before focusing on growth, he said, the central bank’s job was to maintain price and financial stability. It was previously reported that the nation was in negotiations with banks in the Middle East to obtain about $4 billion in loans needed to cover its external debt during the current fiscal year.
Pakistan has budgeted over $20 billion in foreign borrowing for the current fiscal year, in addition to a separate $3 billion rollover from the UAE that was reported for the balance of payments. About $4 billion of the $20 billion projection is expected to be handled through foreign commercial borrowing and another $1 billion through international bonds during the current fiscal year.
