ISLAMABAD (May 07 2009): Pakistan may receive only $8 billion foreign assistance against the expected requirement of $14 billion, facing a shortfall of $6 billion during the current fiscal year. As per an International Monetary Fund (IMF) estimate noted in a press conference on 25 November 2008, Pakistan's financial requirement for 2008-09 was $13.4 billion.
But sources in the ministry of Finance, on condition of anonymity, revealed to Business Recorder on Wednesday that approximately $8 billion will be made available till the end of the current fiscal year. The major portion of this amount $3.947 billion to date is sourced to the $7.6 billion dollar IMF stand by arrangement. In the current year an additional 800 million dollars will be received from International Monetary Fund (IMF) and the remaining $3 billion from other International Financial Institutions (IFIs) and bilaterals.
Pakistan received $5.668 billion foreign loans during the first nine months of 2008-09. Out of this an amount of $3.947 billion has been released by IMF so far with $3.1 billion as first tranche of the standby arrangement in November 2008, and $847 million on March 31 as the second tranche. The remaining $1.721 billion was received from other donors, including World Bank and Asian Development Bank (ADB). IMF is expected to release another tranche of $800 million during the current fiscal year while an additional $1.3 billion from IFIs is also expected to be released within the current fiscal year.
Former Senior Vice President of WB Shahid Javed Burki said that Pakistan would require $12 billion every year for at least the next five years from external sources to meet its financing requirements. Pakistan is expecting to receive $14 billion assistance in the next two years from different sources which include: $3 billion from Kerry Lugar bill, $5.2 billion from Friends of Democratic Pakistan, $2 billion each from World Bank and Asian Development Bank (ADB) and $1 billion each from Islamic Development Bank (IDB) and DFID.
There are serious concerns amongst the policy makers as to how much of the pledges made so far would transform into money in the federal kitty. After the devastating earthquake of 2005, when there was much international sympathy, about $6 billion pledges were made yet these pledges were not all changed into reality. Thus the government would do well to tamper its expectations of the recent bilateral pledges and focus on raising domestic revenue through bringing the untaxed sectors into the tax net, analysts are urging the government.
Burki said Pakistan would require $60 billion external financing in the next five years, arguing that the government must bring more untaxed sectors into the tax net, including agriculture and stock market for revenue generation. He maintained that government would have to enhance revenue collection by bringing it to 15 percent of GDP during the next five years. He opposed slashing development budget, and urged that development budget for the growth oriented sectors should be enhanced.
Dr Ashfaq Hassan Khan, former advisor in ministry of Finance, said it would be a major challenge for the government to achieve fiscal deficit target on the face of massive revenue shortfall. The government will bridge the fiscal difference through PDL this year but it may not have the space of PDL by next fiscal year as the petroleum prices are again on the rise. He said the real problem would be for the government to achieve the target of 3.3 per cent fiscal deficit by next year as committed to the IMF. To a question about Friends of Pakistan pledges, he said it would entirely depend upon the government how it pursues the pledges.
