Pakistan’s efforts to stabilize its economy received a boost as Finance Minister Ishaq Dar requested the China Development Bank to approve a $700 million credit facility. The hope is that this will be complemented by additional funds from other multilateral lenders and friendly countries, which will help to shore up the State Bank of Pakistan’s foreign exchange reserves that have fallen to $3 billion, insufficient to cover even three weeks of controlled imports.
Pakistan is required to raise its forex reserves to at least $10 billion to cover the import bill for two months. In other positive developments, Pakistan anticipates inflows from China, Saudi Arabia, and UAE after the signing of the staff-level agreement, expected on Feb 28, and the IMF executive board meeting, scheduled for the first week of March. The Prime Minister’s secretary sent the finance bill 2023 to the President’s secretary for approval, which was delayed by two days after the National Assembly passed it on Feb 20.
Additionally, US Ambassador to Pakistan, Donald Blome, expressed confidence in the government’s policies and programs for economic sustainability and socio-economic progress during his meeting with Finance Minister Dar. The two also discussed enhancing bilateral trade and investment relations between the two countries. Before the presentation of the bill in parliament on Feb 15, the government had already implemented RS115bn worth of taxes through two notifications on Feb 14.
After formal approval by President Arif Alvi, the remaining RS 55bn tax measures will come into effect, including an increase in general sales tax from 17% to 25% on more than 800 items, mostly nonessential imported items like food and cosmetics. The Federal Board of Revenue will issue SROs to implement the remaining measures. These positive developments bode well for Pakistan’s economic stability and progress.