Pakistan Finance Minister Predicts $10 Billion Forex Reserves by June 2024, Stresses Energy Reforms

Pakistan's finance minister predicts $10B in forex reserves by June 2024, seeks IMF bailout for structural reforms to boost economy and achieve sustainable growth.

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Aqsa Younas Rana
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Pakistan Finance Minister Predicts $10 Billion Forex Reserves by June 2024, Stresses Energy Reforms

Pakistan Finance Minister Predicts $10 Billion Forex Reserves by June 2024, Stresses Energy Reforms

Pakistan's Finance Minister Muhammad Aurangzeb has predicted that the country's foreign exchange reserves will reach $10 billion by June 2024. In recent statements, Aurangzeb stressed the importance of reforms in the energy sector and termed the International Monetary Fund (IMF) bailout package as vital amid Pakistan's formal request for a $6-8 billion Extended Fund Facility.

Aurangzeb said Pakistan is hoping to reach a staff-level agreement with the IMF by June or early July, as the current $3 billion arrangement with the fund is set to expire in late April. "We are seeking a longer-term, bigger loan to help bring permanence to macroeconomic stability and execute structural reforms," the finance minister stated. He added that the government had "very good discussions" with the IMF during the recent Spring Meetings in Washington.

The finance minister highlighted that Pakistan's macroeconomic factors are shifting in its favor, with the currency stabilizing and inflation expected to drop to single-digit levels by the end of next year. He noted that the economy is projected to grow by 2.6% in the fiscal year 2024, with inflation decreasing from 29.2% in fiscal 2023 to around 24%.

Aurangzeb emphasized the need for structural reforms, including increasing the government's tax revenue-to-GDP ratio, reducing losses of state-owned enterprises, and improving the management of the debt-laden energy sector. He revealed plans to privatize major airports and the national airline, Pakistan International Airlines (PIA), by July 2024.

Why this matters: Pakistan's pursuit of a larger and longer-term IMF bailout package underscores the country's ongoing economic challenges and the importance of implementing comprehensive reforms to achieve sustainable growth and stability. The successful negotiation of an IMF deal and the execution of critical structural reforms in the energy sector and other key areas will be vital for Pakistan's economic recovery and long-term prosperity.

Aurangzeb expressed optimism about Pakistan's economic prospects, highlighting the resilience of economic indicators despite challenges. He noted the 5% growth in the agriculture sector and the stock market's record-high performance, with foreign buyers entering the market. The finance minister also emphasized the government's commitment to keeping the current account deficit and fiscal deficit within reasonable limits and the 30.2% increase in tax collection during the first nine months of the current fiscal year.

Key Takeaways

  • Pakistan's finance minister predicts forex reserves to reach $10B by June 2024.
  • Pakistan seeks IMF staff-level agreement by June/July for a longer-term, bigger loan.
  • Economy projected to grow 2.6% in FY2024 with inflation dropping to 24% from 29.2%.
  • Structural reforms planned, including privatizing airports, national airline by July 2024.
  • Successful IMF deal and reforms critical for Pakistan's economic recovery and stability.