ISLAMABAD: The International Monetary Fund (IMF) has warned that Pakistan faces exceptionally high external financing risks and any delay in receiving planned funds from international lenders or donors could jeopardize the government’s economic agenda.

In a Memorandum on Economic and Financial Policy, the IMF said that Pakistan needs to secure adequate financing from its international partners to support its economic reform agenda aimed at stabilizing the economy and reducing fiscal and external imbalances.

The IMF said Pakistan’s gross external financing needs for fiscal year 2023/24 are estimated at around $25 billion, of which $13.8 billion is public sector debt repayments.

The IMF said any shortfalls in external financing would force the government to borrow more from domestic banks, crowding out private credit and increasing the interest burden.

The IMF also warned that Pakistan could face pressure on its exchange rate and external stability due to higher commodity prices, tighter global financial conditions and geopolitical conflicts.

In addition, the IMF said that political tensions ahead of the upcoming elections could affect policy decisions and the implementation of reforms.

Pakistan has assured the IMF that it has secured additional financial commitments of $5.6 billion from bilateral, multilateral and trading partners, of which more than $3 billion has already been disbursed.

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Pakistan also received commitments from these partners for $7 billion in refinancing, $1 billion in maturing debt refinancing and $1.2 billion in amortization savings from debt restructuring of some existing external loans.

The IMF said that in line with program funding commitments, key bilateral lenders would at least maintain their exposure to Pakistan.

Pakistan and the IMF reached a staff-level agreement on a $3 billion 9-month standby arrangement (SBA) to support Pakistan’s economic stabilization program.