In budget 2023-24, Pakistan envisages over $19bn in external financing

Cash-strapped Pakistan has budgeted a whopping Rs5.51 trillion or approximately $19 billion in fiscal year 2023-24 through loans and enhancement of deposits from external sources including the International Monetary Fund (IMF) and commercial banks, documents by the Ministry of Finance showed on Friday.

As per the finance ministry’s ‘Explanatory Memorandum on Federal Receipts’, available with Business Recorder, the government estimated external loans at Rs5,510,580 million, which translates to roughly $19.002 billion in FY23-24 at an exchange rate of Rs290 to the US dollar.

The amount is over 180% higher than the revised estimate for the outgoing fiscal year that stood at Rs1.951 trillion, the document shows, and comes at a time of rising interest rates in the global financial markets.

Out of the $19 billion, as per the budget document, the government will look to raise Rs145 billion or $500 million in short-term loans from Islamic Development Bank (IDB).

The country will also look to enhance its time deposit from Saudi Arabia to Rs870 billion or $3 billion.

Meanwhile, the South Asian country has also budgeted Rs29.58 billion or $102 million for ECO oil facility.

Pakistan is also budgeting new deposits of $3 billion from Saudi Arabia and United Arab Emirates, i.e. $2 billion and $1 billion each, respectively. This is likely to be the deposit commitments announced earlier by Finance Minister Ishaq Dar.

As per the budget documents, the South Asian country also plans to raise a fresh $1.5 billion or Rs435 billion through Euro bonds and international Sukuk in FY23-24.

The documents showed that the government plans to seek loans worth Rs1.305 trillion or $4.5 billion from commercial banks in the coming fiscal year.

Moreover, the Pakistani authorities also expect to enhance its Safe China Deposit from Rs596 billion to Rs1.16 trillion or $4 billion in the coming year.

Lastly, the country is also envisaging Rs696 billion or $2.4 billion in IMF loan for budgetary support, showed the document.

Facing a balance of payment crisis, Pakistan is passing through its worst economic turmoil in history.

Its programme with the IMF has been stalled at the ninth review since November last year.

The country is reeling from an economic crisis with inflation running at a record 37.97% in May and foreign exchange reserves at a precarious position. The government has imposed taxes, raised energy tariffs and scaled back subsidies in an attempt to persuade the IMF to unlock funding, and its central bank has also raised policy interest rates to a record 21%.

The IMF has conducted just eight of the 11 reviews that were to take place during the EFF. The last one took place in August last year.