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Pakistan may require a record $24 billion of foreign assistance to ride out an economic collapse

Miftah Ismail, Pakistan's former Finance Minister

The Shehbaz Sharif government has missed registering a part of the total quantum foreign debt in the just presented budget "by mistake." This amounts to $7 billion comprising part of Chinese loans as well as assistance from the International Monetary Fund (IMF).

According to the Express Tribune, Pakistan’s Finance Minister Miftah Ismail has admitted that the exclusion of IMF and some Chinese loans was a mistake that would be rectified.

With this amount, Pakistan’s foreign economic assistance plan for fiscal year 2022-23 will jump to a record $24 billion, the newspaper said.

Meanwhile, the IMF has asked Pakistan to take additional measures to “strengthen” its budget further. Pakistan is in talks with the IMF for a bailout package.

Also read: Pakistan's new headache –slowing remittance flow

Pakistan has already increased fuel prices as prescribed by the IMF which has now also asked Islamabad to renegotiate energy deals under the China Pakistan Economic Corridor (CPEC).

Pakistan has also been talking to its allies including China, UAE and Saudi Arabia for financial assistance. However, the bilateral lenders have adopted a wait and watch policy. They are unwilling to disburse any loan until Islamabad receives the IMF bailout package.

Amid high inflation and uncertain economic landscape, in June, ratings agency Moody’s downgraded Pakistan’s outlook from “stable” to “negative” indicating that the country’s current account deficit – the difference between the inflow of foreign currency and outflow– will continue to be under pressure in 2022-23 amid high import bills on commodities. Islamabad’s trade deficit also rose by a whopping 58 per cent during July-May period.