ISLAMABAD, Apr 23 : Pakistan’s foreign exchange reserves would reach “anywhere between USD 9 to USD 10 billion” by the end of June, Finance Minister Muhammad Aurangzeb said on Tuesday, underling that the cash-strapped country’s economy was steadily advancing in the right direction.
Aurangzeb made the remarks while addressing the inaugural session of the seventh ‘Leaders in Islamic Business Summit’ in Islamabad, where he said that the expected position in June would be a “much better position in terms of where we were [in the previous year]”, the Dawn newspaper reported.
Pakistan’s foreign exchange reserves would reach “anywhere between USD 9 to USD 10 billion” by the end of June, he said.
Pakistan’s forex reserves crossed the USD 8 billion mark again last month after they fell below it in late February.
Aurangzeb said the International Monetary Fund (IMF) should not be seen as “an end, but a means to an end”.
Commenting on the current Stand-By Agreement (SBA) with the global lender, the minister deemed it important to have entered the programme. “That was absolutely critical that we did that as a country for a reason. There is no plan B. Plan B is unimaginable when you are in a situation where I said you are down to 15 days of import cover,” he said.
The finance minister said that the government has initiated discussions with the IMF for a longer and larger programme for two reasons – to “bring permanence in this macroeconomic stability” and execute the economic structural reform agenda.
“I’ve kept saying that the country doesn’t need policy prescriptions; we know the what and why for the longest time, we just don’t do it,” Aurangzeb said, adding that the country needed to get into an “execution mode”.
“We need to move towards sustainability,” he stressed, warning that otherwise, reforms could not be implemented.
Aurangzeb also termed the energy equation a “huge priority” when it came to the sustainability of the reforms, whether they pertained to the power or petroleum sectors.
On the tax challenges, the minister said, “One is a policy and enforcement gap and the other is obviously bringing in the undertaxed and the untaxed sectors into the net.”
Cash-strapped Pakistan has made a formal request to the IMF to seek the next bailout package in the range of USD 6 to USD 8 billion with the possibility of augmentation through climate financing.
“I’m still hoping we will get into a staff-level agreement by the end of June or early July so we can move on to an end. IMF is a means to an end, not an end in itself,” the finance minister said.
Pakistan’s current USD 3 billion arrangement with the IMF runs out in late April and the government is seeking a longer and bigger loan to help bring permanence to macroeconomic stability and an umbrella under which the country can execute much-needed structural reforms.
In March, IMF staff and Pakistani authorities reached a staff-level agreement for the second and final review, which was subsequently forwarded to the IMF’s Executive Board for final approval. Upon approval, Pakistan would have access to approximately $1.1bn.
Previous statements from both the IMF and Pakistani officials indicated that not only would the board convene on April 29, but it would also approve the release of the final tranche of $1.1bn under the SBA signed in June 2023.
After contracting in 2023, growth in Pakistan’s economy is projected to rebound to 2 per cent in 2024, supported by continuing positive base effects in the agriculture and textile sectors. (PTI)
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