Pakistan allocates $20.3 billion for external financing in FY2024-25

The Finance Bill 2024 has revealed that the authorities in Islamabad have earmarked Rs5.685 trillion, which is over $20.3 billion, for external financing in the upcoming fiscal year. This allocation includes plans to repay foreign loans amounting to Rs4.99 trillion, approximately $18 billion, along with an additional Rs29.95 billion set aside for short-term credit repayments. However, specific details about the sources of external financing remain undisclosed, leaving the net external funding sought by the government at Rs666.338 billion or $2.5 billion.

The recently unveiled budget for FY2024-25 by the federal government outlines a total outlay of Rs18.9 trillion, marking a significant 30% increase from the previous fiscal year. Finance Minister Muhammad Aurangzeb expressed confidence in meeting external debt obligations for the upcoming fiscal year, despite concerns surrounding Pakistan's foreign exchange reserves.

During FY24, the State Bank of Pakistan (SBP) reported a total external debt servicing of $24.3 billion, with $3.9 billion allocated for interest payments and the remaining $20.4 billion for principal repayments. Pakistan is looking to secure a new loan of at least $6 billion from the International Monetary Fund (IMF) to aid in repaying substantial debts due. Following the conclusion of a nine-month Extended Fund Facility (EFF) agreement with the IMF last summer, Pakistan has been engaged in negotiations for a long-term arrangement to bolster the country's economy.

The government's proactive approach in allocating funds for external financing and debt repayments demonstrates a commitment to managing Pakistan's financial obligations effectively. With a focus on meeting debt obligations and securing necessary funding, Pakistan aims to strengthen its economic stability and ensure sustainable growth in the coming fiscal year.