ISLAMABAD, July 23 (DNA): Pakistan’s $33.5 billion external financing
needs are fully met for the financial year 2022-23, the State Bank of
Pakistan (SBP) chief said on Saturday, adding that “unwarranted” market
concerns about its financial position will dissipate in weeks.

Fears have risen about Pakistan’s stuttering economy as its currency
fell nearly 8% against the US dollar in the last trading week, while the
country’s forex reserves stand below $10 billion with inflation at the
highest in more than a decade.

“Our external financing needs over the next 12 months are fully met,
underpinned by our ongoing International Monetary Fund (IMF) programme,”
the acting governor of Pakistan’s central bank, Murtaza Syed, told
Reuters in an emailed reply to questions.

Pakistan last week reached a staff-level agreement with the
International Monetary Fund (IMF) for the disbursement of $1.17 billion
in critical funding under resumed payments of a bailout package.

“The recently secured staff-level agreement on the next IMF review is a
very important anchor that clearly separates Pakistan from vulnerable
countries, most of whom do not have any IMF backing,” he said.

However, the lender’s board needs to approve the agreement before the
disbursement, which is expected in August, before which there remain
prior policy actions to be fulfilled, according to sources familiar with
the matter.

But some question Pakistan’s ability to meet external financing needs,
including debt obligations, despite the IMF funding.

Syed played down those concerns saying Pakistan’s public debt profile,
one of the “main flashpoints” for markets these days, is a lot better
than in vulnerable countries with high public debt.

The country’s public debt-to-GDP ratio is 71%.

“Pakistan’s external debt is low, of relatively long maturity, and on
easier terms, since it is heavily skewed toward concessional
multilateral and official bilateral financing rather than expensive
commercial borrowing,” he said.

In a recent presentation to international investors reviewed by Reuters,
Syed said $33.5 billion in gross external financing needs would be met
“comfortably” with $35.9 billion in available financing.

Most of the financing was shown from multilaterals, oil payment
facilities, and rollovers of bilateral financing, and the heaviest
financing needs were in Q2 of FY23.

The presentation also compared the situation in Pakistan to Sri Lanka,
which recently defaulted, and said: “Pakistan tightened monetary policy
and allowed the exchange rate to depreciate as soon as external
pressures began.”

It added that Sri Lanka’s fiscal position had been much worse than
Pakistan’s, with primary deficits three to four times larger since the
pandemic.

Syed said Pakistan is being unfairly grouped with more vulnerable
countries amid panic in global markets due to a commodity supercycle,
tightening by the US Federal Reserve and geopolitical tensions.

“Markets are responding to these shocks in an unfairly broad-brush way,
without paying enough attention to Pakistan’s relative strengths,” he
said.

“We expect this reality to dawn in the coming weeks and the unwarranted
fears around Pakistan to dissipate.”