Pakistan needs $25 billion in loans this fiscal year, according to the IMF

The International Monetary Fund (IMF) has adjusted Pakistan’s foreign loan requirements for the current fiscal year to $25 billion, marking a reduction of $3.4 billion. Additionally, the IMF has revised the economic growth projection to 2%, rejecting the government’s forecasts. The inflation projection has also been lowered to 22.8% from the initial estimate of 25.9%. The IMF did not accept the government’s projections for the current account deficit, imports, economic growth, and gross financing requirements, making adjustments during the first review talks. Despite securing a date for general elections, the IMF brought the Special Investment Facilitation Council under its oversight.

The available financing has been cut by $3.7 billion due to challenges in obtaining loans through Eurobonds and foreign commercial banks. The IMF disagreed with Pakistan’s projections on the current account deficit and imports, estimating a deficit of $5.7 billion and imports at $58.4 billion. Remittances are projected to be $3.5 billion less than the previous forecast. The reduction in foreign loan requirements is attributed to lower repayments by the private sector and a rollover of public sector debt by China’s Exim bank.

The estimated available financing has decreased to $26.6 billion, reflecting a lack of interest from global markets and foreign banks. The IMF’s program loan receipts have been adjusted to $300 million, compensated by an increase in project financing estimates. In October, loan inflows were slow at $315 million. The total lending to Pakistan has reached $6 billion in four months.

The IMF has lowered the economic growth projection to 2% and the inflation rate forecast to 22.8%, aligning with the World Bank and Asian Development Bank’s projections. The inflation forecast for June next year has been slightly increased to 16.5%. Despite a commitment to lower interest rates in January’s monetary policy announcement, the projected increase in electricity and gas prices may impact these projections.