Share this story!            

Pakistan urgently needs $3-4bn to stabilise: adviser

ISLAMABAD: Pakistan needs a capital infusion of $3-4 billion ‘up front’ to stabilise its economy and bolster rapidly dwindling foreign currency reserves, economist Saqib Sherani said on Monday. Sherani, who is serving on the prime minister’s economic advisory council, said Pakistan faced a total financing gap of $7 billion to cover a projected current account deficit of $14 billion for the fiscal year ending on June 20, 2009, but not all the funds were needed immediately. “Up front we need at least 3 to 4 billion dollars to stabilise the economy,” he said. He described the projected financing gap for the current account as a ‘ballpark figure’ that took into account already expected financing, and foreign direct investment (FDI) and portfolio flows. “The financing gap could be higher or lower, depending on how world oil prices go and what happens to imports.” There are expectations that multi-lateral lenders and friendly governments will help Pakistan avoid defaulting on a sovereign bond maturing in February, though the market has priced in the risk. Sherani said potential donors have been waiting to evaluate the government’s strategy before pledging funds, but the situation was becoming increasingly desperate. “Now, whether we have a policy framework or not, the donors need to step in and give us the money,” he said. Analysts say Pakistan hopes to bridge the financing gap with a Saudi oil facility, around $2.5 billion from multilateral lenders and $1.5 billion in US aid. Farhan Rizvi, senior analyst at JS Global Capital Ltd in Karachi, said he expected FDI to fall to $3-3.5 billion this financial year compared with $5.15 billion in 2007/08. reuters

Home | National

Share this story!