ISLAMABAD: Pakistan requires gross external finance of $51.6 billion in the current fiscal year 2021-22 and the following fiscal year 2022-23 to meet its needs. $ Billion Investment required in Two Years.
Without a deal with the IMF under the existing $6 billion Extended Fund Facility (EFF) during the ongoing talks in Washington, D.C.
Massive gross external financing:
This massive gross external financing requirement will be jeopardise, as other multilateral creditors such as the World Bank and Asian Development Bank have suspended programme loans.
“Unable to reconcile on Memorandum of Economic and Financial Policies (MEFP), the International Monetary Fund (IMF) and Pakistan have so far failed to strike staff-level agreement under $6 billion Extended Fund Facility (EFF).”https://t.co/txQKPwfyDx— “LL Cole J” Coleman (@DemopJ) October 17, 2021
The World Bank and the Asian Development Bank will continue to grant project loans, but disbursements will remain dismally low due to a lack of competence to implement projects.
In reality, if the executing agency’s implementation capacity is improve the federal and provincial governments might increase project loan payments by $2 to $3 billion. The agency in charge of credit ratings.
Despite the IMF’s relatively conservative predictions, Pakistan’s gross external funding requirement for 2021-22 and 2022-23 is $23.6 billion and $28 billion, respectively.
#NEWS: “$6 billion tranche: Pakistan, IMF fail to reach Agreement”— Khurram Zubair (@khurramm_zubair) October 17, 2021
Pakistan, IMF fail to reconcile on Memorandum of Economic and Financial Policies (MEFP).
IMF staff is still unsatisfied with macroeconomic framework under the MEFP.#PAKISTAN_IMF_AGREEMENT #6Billion_Tranche pic.twitter.com/5nvFunBckB
In light of Pakistan’s looming gross
In light of Pakistan’s looming gross external finance needs, the government is making last-ditch efforts to reach a deal with the IMF at the staff level.
If the discussions fail to reach a conclusion, it will be a bad indication for the economy.
Although both sides have indicated that the talks will continue, they should be finalize to remove the clouds of uncertainty that have been hanging over the country’s economic horizon.
In background discussion with top Pak authorities for ascertaining the reasons that had created stumbling blocks for striking staff-level agreement.
$ Billion Investment required in Two Years
They highlighted major reasons including tough conditions laid down by the IMF team and secondly a very weak team negotiated technical level talks on behalf of Pakistan for inability to evolve a consensus on Memorandum of Financial and Economic Policies (MEFP).
The official sources says that the IMF asking for the removal of distortions into the taxation system and point out that different GST exemptions and rates should be align with the standard rate of 17 percent.
The standard GST rate of 17 percent should be imposed on POL products. The GST rate on fertilizer, tractors and other items should be brought at standard rate of 17 percent.
The headline suggests the talks have completely failed which seems not the case— Economy of Pakistan (@Pakistanomy) October 17, 2021
Irresponsible journalism promoting sensationalism!
Delayed for few days & middle ground will be discovered
Need strict media laws for financial news especially, many times PSX is manipulated by these https://t.co/paM63U93Tu
However, Pakistani authorities are opposing such proposals arguing that it would further marginalize the neglected agri sector.
With regard to capacity constraints, the official said that Ministry of Commerce had projected imports to the tune of $50 billion on eve of preparation of budget for 2021-22 and Shaukat Tarin had shown his annoyance over wrong and understated estimates.
Now after three months, the import bill touched around $20 billion and at the existing pace, it might touch $78 billion for the current fiscal year.
If the import compression in letter and spirit, then the monthly import could be reduce by $1 billion from $6 billion to $5 billion, so the imports could be reduce to $65 billion.
With such massive slippages, the number crunching and validation of data becomes a cumbersome exercise.