Pakistan eyes US$4 billion from Middle Eastern banks to plug financing gap

PAKISTAN aims to raise up to US$4 billion from Middle Eastern commercial banks by the next fiscal year, the country’s central bank chief told Reuters on Tuesday (Aug 27), as the country looks to plug external financing gaps.

In a wide-ranging interview, his first with any media organisation since taking office in 2022, State Bank of Pakistan governor Jameel Ahmad said Pakistan was also in the “advanced stages” of securing US$2 billion in additional external financing required for International Monetary Fund approval of a US$7 billion bailout programme.

Pakistan and the IMF reached an agreement on the loan program in July, subject to approval from the IMF’s executive board and it obtaining “timely confirmation of necessary financing assurances from Pakistan’s development and bilateral partners”.

Asked about monetary policy, Ahmad said recent interest rate cuts in Pakistan have had the desired effect, with inflation continuing to slow and the current account remaining under control, despite the cuts.

Pakistan’s annual consumer price index inflation was 11.1 per cent in July, having fallen from highs of over 30 per cent in 2023.

“The Monetary Policy Committee will review all these developments,” Ahmad said, adding that future rate decisions could not be pre-determined.

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Pakistan’s central bank cuts interest rates to boost economy

Pakistan’s central bank cut rates for two straight meetings from a historic high of 22 per cent to 19.5 per cent, and will meet again to review monetary policy on September 12.

“Now we have to focus on growth and other related areas because those are also equally important for job creation and other socioeconomic issues,” said Ahmad.

He added that the central bank’s mandate was to ensure price and financial stability before shifting its focus towards growth. REUTERS