KARACHI: Finance Minister Ishaq Dar approved raising $2 billion from abroad Pakistanis on Thursday to help the country navigate the current economic crisis.
At a conference titled ‘Defining a Roadmap for the Islamization of Pakistan’s Economy,’ Saylani Welfare International Trust Chairman Bashir Farooqi asked the finance minister for permission to raise $2 billion freely from overseas Pakistanis through the charity’s worldwide welfare network.
Dar, who was available via video conference link, directed the State Bank of Pakistan (SBP) to document the projected debt increase.
“The transaction should be clear, well recorded, and there should be a well-defined means of raising debt,” the finance czar stated. Farooqi stated that the debt will be raised for five years at no interest and that the monies will be transferred to the government by the trust.
“The government may utilize it to clear import items delayed at Karachi port due to the current scarcity of foreign exchange reserves,” said the chairman of the trust.
Pakistan’s full-fledged economic instability, from its largest-ever currency devaluation to a rash of emergency spending cuts, is the strongest indication yet that the nuclear-armed nation faces default unless enormous support is provided.
After being pushed to the verge by last year’s terrible floods, the government now has only $3.7 billion in reserves, or barely enough for three weeks of vital imports, with elections approaching in November.
‘Confident’ Pakistan will meet IMF conditions, says mission chief
It sorely needs the International Monetary Fund to discharge a $1.1 billion late tranche, leaving $1.4 billion in a stalled rescue package set to expire in June.
Although an emergency IMF delegation has arrived in Pakistan, there are no promises amid a mounting list of issues following the November suspension of disbursements under the current package, which was increased to $7 billion after the floods.
A 15% depreciation of the rupee and a spike in fuel prices last week should help clear some major stumbling blocks, especially since tax measures appear to be on the way.
However, as the bailout package cannot be prolonged beyond June and the elections approach, pressure is mounting.