Islamabad – Pakistan’s foreign exchange reserves have once again gone beyond $10 billion benchmark after getting another loan from the friendly country China.
The reserves held by the State Bank of Pakistan (SBP) have recorded at $10.35 billion during the week ended on July 27 showing increase of $1.34 billion in one week. “During the week ending 27July2018, SBP’s reserves increased by $1,339million to US$10,350million, due to official inflows,” the SBP said. The reserves have enhanced due to inflow of loan from the China that provided more than one billion dollars to Pakistan.
China has recently pledged to give two billion dollars to Pakistan, which could avert the pressure on the foreign exchange reserves for the time being.
The loan was in the pipeline since previous government was in charge. Pakistan’s foreign exchange reserves are sharply declining in financing current account deficit and repayment of previous loans. The current account deficit had recorded at $18 billion during previous fiscal year (FY2018).
However, the caretaker Finance Minister Dr Shamshad Akhtar on Thursday has said that there was no issue of the foreign payments. However, pressure on foreign payments would rise during next quarter of current financial year. Therefore, the reserves would come under pressure in next few months. The top economic experts of the country had already warned that Pakistan would have to go to International Monetary Fund (IMF) for stabilizing its foreign exchange reserves of the country.
Caretaker Minister for Finance and Planning Dr Shamshad Akhtar said on Thursday that it was wrong to assume that Pakistan was approaching the International Monetary Fund to rescue the payment under the China-Pakistan Economic Corridor project. “There is a lot of misunderstanding that Pakistan is approaching the IMF to rescue the payment of the CPEC project but it should be clear that there is no link between the CPEC and the IMF. We will bring a clarity on the expenditures incurred on the CPEC project,” she said while talking to the media after addressing a workshop titled “Sustainable Development Goals-Baseline and Target Setting”, organized by the planning commission.
The workshop aimed to discuss and generate an open debate on the SDGs, standards and definition, synchronizing data, resolving key methodological issues, aligning federal and provincial budgets, taking on board provincial and local governments to actively pursue the goals and play an effective role in the implementation of policies.
Dr Akhtar said that China was supporting Pakistan for CPEC projects. The CPEC is helping the country in the infrastructure sector besides overcoming the energy crisis and ensuring industrial development.
Replying a question on the IMF loan, the minister said that they were doing homework for the IMF programme and will apprise the upcoming government of the whole scenario. She said that it is wrong to use the word bailout package for the IMF programme. “I don’t know why this word bailout package’ is popular in Pakistan. The IMF is an international organization which is often good to consult in a situation when you face macroeconomic challenges. If you are going to engage for growth and development, then stability is very critical,” she said.
The caretaker minister also showed concern over the statistics present in the ongoing budget and said that it required review. “Some of the statistics presented in the budget-2018-19 are unrealistic,” the minister said.
Replying another query regarding the foreign exchange reserves, she said that two days back, the foreign exchange reserves stood at $10.3 billion. “The immediate situation is quite manageable on the reserves side,” she said adding “Of course, we are looking at different scenarios,”. Dr Akhtar said that no major repayment has been made recently, however, these will be coming in the second quarter of the current fiscal year.
She said that there was a need to strengthen macroeconomic stability to increase economic growth. “We have learned from the experience that if we do not maintain macroeconomic stability, then our growth is under risk. It is very important to re-strengthen macroeconomic stability,” she said.
Dr Akhtar said that after the 18th constitutional amendment, provinces should take responsibility of health, education, environment and other sectors. She said that the provinces were getting more resources under the NFC Award. “If we make a fiscal policy for the future, then we should give 100 percent responsibility to the provinces,” she said.
Earlier addressing the workshop, Dr Akhtar emphasized that for the purpose to jot down as to how provincial and local statistical organizations could leap forward enhancement and augmentation of data itself, significant measures and initiatives were required to ensure receiving of cross-verified data through a credible mechanism. Furthermore, she said, Pakistan needed to focus on institution and capacity building of human resource by diverting necessary resources.
She said that Pakistan also will have to adopt strategies to enhance local participation and use local potential as a means not only for monitoring and accountability of SDGs but also for implementing the agenda 2030.
Dr Akhtar highlighted that Pakistan was facing challenges of acute macroeconomic instability and a fiscal deficit. “The country needs a strict financial discipline and consistent policies to overcome this challenge,” she said.
She maintained that creative approach was needed to find a mechanism to insulate effective financing of SDGs bearing in mind the financial restraints the country was facing.