Pakistan’s Liquidity Risk Remains High Despite IMF Deal, Warns Moody’s
Pakistan’s liquidity risks are expected to remain high even if the International Monetary Fund (IMF) approves a new stand-by arrangement (SBA), according to Moody’s Investors Service. The South Asian country recently secured a $3 billion short-term financial package from the IMF to provide relief to its crisis-hit economy, but Moody’s cautions that this alone will not be enough to meet Pakistan’s external debt repayments. The agency emphasizes that long-term financing plans are required to address the country’s significant external financing needs in the coming years.
Moody’s also highlights the uncertainty surrounding Pakistan’s ability to secure the full amount of IMF financing during the nine-month program, as well as the government’s commitment to implementing reforms, particularly revenue-raising measures, ahead of the upcoming elections scheduled for October. The agency points out that Pakistan’s access to loans from bilateral and multilateral partners will be severely constrained until a new program is agreed upon.
However, despite the challenges ahead, an IMF disbursement is likely to facilitate financing from other sources, which could aid Pakistan in meeting its financing requirements. The agency emphasizes the importance of securing financial aid from both bilateral and multilateral partners to support the country amid its liquidity crisis.
Moody’s suggests that Pakistan may consider another IMF program that could span over a few years after the general election. However, the agency acknowledges that negotiations for such a program would take time, even if they are successful.
To ensure a comprehensive and balanced view of the situation, it is important to consider different perspectives and opinions. The focus should remain on providing valuable content without promotional language while maintaining journalistic integrity.
Overall, Moody’s assessment underscores the urgency for Pakistan to implement necessary reforms and develop a robust long-term financing plan to address its liquidity risks and external financing needs in the face of ongoing economic challenges.
