Pakistan’s out-most debt is expected to grow to a surprising amount of $90 billion in the subsequent 4 years and as a consequence Pakistan will need $20 billion a year in order to accommodate an out-most financing mandate amid concerns that all inherent arrangements are put in place to conduct debt have turn ineffective.
The difference of $14 billion was largely on account of foreign loans that will fly in to finance China Pakistan Economic Corridor (CPEC) projects.
The current account deficit came from the bridge between the external payments and receipts that are supposed to exponentially widen up to 4% of the total size of the economy against this year’s level of just under 1% of GDP.
Pakistan’s exports are currently hovering around the $24 billion mark.
Dr Kaiser Bengali, an economic consultant to government of Baluchistan said that in order to ensure transparency, there must be a law requiring government to take parliamentary approval of any deal signed with the foreign governments and lending agencies.
Pakistan will receive the next installment worth $502 million of its loan from the International Monetary Fund (IMF) in December as part of a three-year economic bailout package, officials said.
Ishaq Dar, Pakistan’s finance minister said his country will get the loan after an IMF board meeting in December.
Pakistan state media said the announcement was made by Dar and IMF officials at the conclusion of talks in Islamabad late Thursday.
The IMF has voiced satisfaction with Pakistan’s progress on reforms which were required under a $6.6 billion bailout agreed in 2013.
‘Economic activity continues to improve while challenges remain,’ he said, adding that GDP is set to grow by about 4.5 percent in 2015/2016.
Standard and Poor’s in May revised the country’s credit rating outlook from stable to positive and forecast higher GDP growth for 2015 to 2017.
In order to secure the next $502 million loan tranche from the International Monetary Fund (IMF), Pakistan has agreed to slap roughly Rs40 billion in additional taxes to bridge the shortfall in its revenue targets.
He said the staff level agreement was subject to the approval of the IMF board, which, according to Dar, is expected to meet on December 15.
The three-year $6.2 billion EFF program is built on five key conditions, known as quantitative performance criteria, and many structural benchmarks.
Pakistan’s debt affordability has weakened after it shifted to non-conventional loans by issuing $3.5 billion worth of international bonds, increasing its borrowing costs, according to the latest report by an international credit rating agency.
The IMF also projects that Pakistan’s external debt will balloon to $74.5 billion by the end of the incumbent government’s five-year term. External debt stood at $60.8 billion in 2012-13. The PML-N came to power towards the end of that fiscal year.