Pakistan aims to raise up to $4 billion from Middle Eastern commercial banks by the next fiscal year, the country's central bank chief told Reuters on Tuesday, as the country looks to plug its external financing gap.
In a wide-ranging interview, his first with any media organisation since taking office in 2022, State Bank of Pakistan Governor Jameel Ahmad said Pakistan was also in the "advanced stages" of securing $2 billion in additional external financing required for International Monetary Fund (IMF) approval of a $7 billion bailout programme.
Pakistan and the IMF reached an agreement on the loan programme in July, subject to approval from the IMF's executive board and it obtaining "timely confirmation of necessary financing assurances from Pakistan's development and bilateral partners". In the past, Pakistan has relied on long-time allies such as China, Saudi Arabia and UAE to 'rollover' debt rather than force a repayment crunch. Ahmad said he expected similar assurances would be given for the next three years.
In addition, Ahmad said the central bank reckoned Pakistan's gross financing needs for the coming years would be lower than the 5.5% of gross domestic product projected by the IMF in its latest country report in May.
"Since (the IMF's) assessment was based on a higher CAD than realised in fiscal 2024 and now projected for the next few years, we assess the ratio of gross financing needs to GDP to be lower than the 5.5% level.
Asked about monetary policy, Ahmad said recent interest rate cuts in Pakistan have had the desired effect, with inflation continuing to slow and the current account remaining under control, despite the cuts.
There have been some concerns in markets that the government might take advantage of lower interest rates to borrow more, but the central bank chief said this was not his expectation.
"We understand that the government will continue on the path of fiscal consolidation, notwithstanding the reduction in interest rates," said Ahmad.
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