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Pakistan forex reserves to rise to over $12 billion when China payment arrives this week

Pakistan forex reserves to rise to over $12 billion when China payment arrives this week

FILE PHOTO: A man wears a protective face mask as he walks among other people along a street, as the outbreak of the coronavirus disease (COVID-19) continues, in Karachi, Pakistan June 16, 2020. REUTERS/Akhtar Soomro

ISLAMABAD : Pakistan's foreign exchange reserves will rise to more than $12 billion after it receives some $2.4 billion from China in the next two to three days, Finance Minister Miftah Ismail said on Thursday, a day before presenting the annual budget.

The 2022-23 budget will target an estimated 5 per cent GDP growth, lower than the 5.9 per cent of the outgoing financial year, and introduce tough fiscal consolidation measures to meet benchmarks set by the International Monetary Fund (IMF).

Speaking at the launch of the annual Economic Survey report, Ismail also said that Pakistani exports rose 28 per cent and imports increased 48 per cent in the current financial year 2021-22 compared with last year, and the trade deficit stood at $45 billion.

With foreign reserves falling below $10 billion, hardly enough for 45 days of imports, a widening current account deficit, a historical fiscal deficit and double-digit inflation, Pakistan has been facing a balance of payment crisis.

The Chinese money is significant as long as the IMF does not clear its 7th review to resume funding from a $6 billion rescue package agreed in 2019.

If the IMF review is cleared, Pakistan will get a tranche of $900 million, which would also unlock other sources of external financing.

The government that took over from ousted Prime Minister Imran Khan in April says it has inherited a serious economic crisis.

Khan and his aides deny that, saying they managed to achieve strong GDP growth despite COVID-19 shutdowns that incurred big losses to industry and trade.

The economic survey said the economy had rebounded from the pandemic, after suffering a 0.94 per cent contraction in FY2020, and maintained V-Shaped recovery by posting real GDP growth of 5.97 per cent in the fiscal year 2022, but that, "this high growth, however, is unsustainable and has resulted in financial and macroeconomic imbalances."

"We need sustainable growth," said Ismail, the finance minister, adding, "We have, thank God, already averted a default."

Source: Reuters

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