The Pakistani government is facing a $4.5 billion shortfall in its external financing plan and a potential Rs1 trillion budget overrun due to an understatement of debt expenditures. These problems could pose a serious challenge during the first review of the International Monetary Fund (IMF) program in November.
The government had budgeted $4.5 billion in loans from foreign commercial banks and $1.5 billion in Eurobonds. However, due to Pakistan's low credit rating and the global higher interest rates environment, the government is unlikely to be able to secure $3 billion in non-Chinese commercial loans.
The government is still hopeful that it will receive a $1 billion Chinese commercial financing and another $600 million from other sources. However, the chances of arranging $1.5 billion by floating bonds are also very slim.
As a result, the government is looking for alternative means of external financing, such as increasing disbursements from multilateral creditors and raising money through privatization.
The finance ministry has been asked to review the external financing plan in light of the prevailing economic conditions and to explore the possibility of increasing disbursements from multilateral and bilateral creditors.
