IMF rules out possibility of realization of $3.5 billion from International Commercial Banks

SLAMABAD, Jan 27 (SABAH): International Monetary Fund (IMF) has ruled out the possibility of realization of $3.5 billion from International Commercial Banks and also ruled out the possibility of the launch of $1.5 billion Euro Bond during this fiscal year 2023-024.

During the Mid Term review of the foreign financing plan for this fiscal year for Pakistan, the IMF authorities have categorically said that the budgeted inflows from foreign commercial banks (US$ 3.5 billion) and launch of Euro Bond in the international capital markets worth US$ 1.5 billion seem unlikely to be materialized. However, the Fund authorities have said that Pakistan is hardly to be able to get financing to the tune of $500 million to $1 billion from international commercial banks during this fiscal year, against a budgeted figure of $3.5 billion for the entire fiscal year.

Owing to delay in the holding of general elections from August 9, 2023 to February 8, 2024, the IMF authorities have also ruled out the launch of Pakistan Euro Bond to the tune of $1.5 billion during this fiscal year.  

According to the IMF report, as far as the external financing plan for FY24 is concerned, external inflows during July-December 2023 have been substantial and as per plan. A total of $ 5.1 billion of externalinflows are expected by end Dec 2023. This excludes US$ 4.0 billion of bilateral rollover. The inflows mainly represent the inflows from multilateral and bilateral sources. However, no debt from private sector was obtained i.e., foreign commercial bank loans and Eurobonds, the report added.

In July, the authorities had a bilateral debt rearrangement of US$ 2.4 billion for FY24 and FY25 which created cushion. The budgeted inflows from foreign commercial banks (US$ 3.5 billion) and international capital markets (US$ 1.5 billion) seem unlikely to be materialized, but it is planned to mobilize $ 0.5-1.0 billion from foreign commercial banks as new financing.

In addition to that, government is making efforts to meet the remaining target of US$ 3.5 billion, however, it seems unlikely that this target will be met during second half of FY24. Out of US$ 3.5 billion, it is expected that authorities will be able to mobilize around US$ 0.5 billion to US$ 1.0 billion. The authorities budgeted US$ 1.5 billion through international capital markets that will only be considered once feasible.