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ISLAMABAD: Pakistan’s external position is under significant stress following delays in securing official sector financing which has driven a continued decline in Pakistan’s foreign exchange reserves, says Moody’s Investor Services (Moody’s).

The rating agency issued a note following the International Monetary Fund (IMF) mission concluded its visit to Pakistan on 9 February as part of the ninth review of Pakistan’s IMF Extended Fund Facility (EFF) programme.

Moody’s stated that while the IMF noted that considerable progress was made during the visit on policy measures to address domestic and external imbalances, there is no certainty yet on whether, and if so when, IMF financing will be forthcoming.

IMF stresses on 'timely, decisive' implementation of policies as virtual discussions to continue

Pakistan’s external position is under significant stress, following delays in securing official sector financing which have driven a continued decline in Pakistan’s foreign exchange reserves. The reserves have dwindled to $2.9 billion in the week ending 3 February, according to data from the State Bank of Pakistan, sufficient to cover less than one month of imports.

The financing from IMF, which is likely to also catalyse funding from other multilateral and bilateral partners, is crucial to alleviate Pakistan’s liquidity stresses. Revenue-raising measures will likely be among the prior actions that IMF requires before releasing the next tranche of financing. However, elevated social and political risks compound the government’s difficulty in implementing reforms, including revenue-raising measures that would improve the country’s fiscal position and liquidity position.

Pakistan’s government liquidity and external vulnerability risks are elevated, and there remain considerable risks around Pakistan’s ability to secure required financing to fully meet its needs for the next few years, it added.

Copyright Business Recorder, 2023

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Pakistani1 Feb 11, 2023 01:26pm
Govt seems unwilling to reduce the expenses relating to size of the cabinet, armed forces, bureaucracy, law makers, real estate and agriculture but appears willing to load more taxes on the narrow base of salaried class and tax payers. These are not sustainable and should be changed immediately.
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Pakistani1 Feb 11, 2023 02:27pm
Moody is using polite language to describe a catastrophic situation. Is anyone listening in Pakistan? More importantly is anyone taking serious action?
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