Help from ‘friends’

PAKISTAN is likely to get $4 billion (£3.3bn) from friendly countries this month to bridge a gap in foreign reserves highlighted by the International Monetary Fund (IMF), the country’s finance minister said, two days after sealing a deal with the lender.

The IMF has reached a staff level agreement with Pakistan that would pave the way for a disbursement of $1.17bn (£973 million). The board is also considering adding $1bn (£823m) to a $6bn (£4.99bn) programme agreed in 2019.

“As per the IMF, there is a $4bn gap,” the minister, Miftah Ismail, told a news conference in Islamabad, referring to the shortfall in foreign reserves.

“We will, God willing, fill this gap in the month of July,” he said. “We think we will get $1.2bn [£998m] in deferred oil payment from a friendly country. We think that a foreign country will invest between $1.5bn [£1.2bn]-$2bn [£1.6bn] in stocks on a G2G (government-to-government) basis, and another friendly country will perhaps give us gas on deferred payment and another friendly country will make some deposits.”

Depleting reserves, a widening current account deficit and the depreciation of the Pakistani rupee against the US dollar have left the south Asian nation facing a balance of payment crisis.

Without the IMF deal, which should open up other avenues for external finance, Ismail said the country could have headed towards default. He said Pakistan will also get around $6bn from the World Bank and the Asian Development Bank in FY2022-2023.

Pakistan secured a $6bn IMF programme in 2019, but less than half of that amount has been disbursed to date.

Pakistan’s central bank has hiked its key interest rate to 15 per cent to curb inflation, which hit 21.3 per cent in June.