It’s possible that not much will change regarding donor funding.
The business community believes that financial changes won’t alter much if the IMF isn’t involved.
At a day-long meeting in Geneva on Monday, Pakistan reported that multilateral donors and friendly nations had pledged a staggering $10 billion to aid the flood-devastated country in rehabilitation and reconstruction. However, a large number of international promises have been made with the requirement that the International Monetary Fund (IMF) loan programme be revived, and experts worry that this may not make a significant difference for the faltering economy.
Tahir Abbas, Head of Research at Arif Habib Limited (AHL), stated in a statement to The Express Tribune that these commitments are a relief at a time when the country is in desperate need of foreign funding. The majority of the financial commitments are dependent on the IMF lending program’s resurrection, so Pakistan should expedite its efforts in this area.
The Islamic Development Bank (IDB) has made the single largest commitment of $4.2 billion to be given over the next three years, according to the breakdown announced by Information Minister Marriyum Aurangzeb. However, the precise timelines and other details for the flow of funding into the country remain unknown.
Also at the conference, the World Bank (WB) announced $2 billion, the Asian Development Bank (ADB) $1.5 billion, the Asian Infrastructure Investment Bank (AIIB) $1 billion, Saudi Arabia $1 billion, the European Union (EU) $500 million, USAID $100 million, Japan $77 million, and Germany pledged 84 million euros.
Fahad Rauf, the head of research at Ismail Iqbal Securities, believes that while the cash would give the nation a brief respite, little else will change as a result.
“Of the $10 billion in pledges, we anticipate that $3 to $4 billion will enter the nation in the following six months. He added, “We are set to repay $13 billion in foreign debt in the next six months until June 30, 2023, and another $74 billion through June 2026. These inflows will strengthen the country’s dwindling foreign exchange reserves.
“The finance itself hasn’t changed all that much. This will just buy the country some time to implement crucial economic reforms that are long overdue, Rauf emphasised. Abbas recalled some of the prior promises made to the nation when the floods initially hit, saying, “The assurances appear sincere. This time, international funders are making the pledges. They’ll stick to their word.
In three years, he believed Pakistan will receive the majority of the announced cash for flood assistance. Rauf voiced a similar optimism that the $10 billion in financial announcements announced today are in addition to the foreign commitments that the government had estimated at the start of the year (Jul-June 2022).
Akbar Zaidi, an economist and the executive director of the Institute of Business Administration (IBA), raised concerns about whether the commitments will be utilised for political or for the rehabilitation of the impacted individuals. He continued, “The administration has no economic policies to manage the country; all it has done so far is beg friendly countries to help it survive.”
On the sidelines of the Geneva summit, Finance Minister Ishaq Dar met with Nathan Porter, who is in charge of the IMF’s mission to Pakistan. The gathering is viewed as a step toward restarting the dormant IMF programme. The Pakistani finance minister reaffirmed the nation’s commitment to completing the fund project, the information minister said, adding that the Pakistan-IMF conference covered the issues facing “regional economies” against the backdrop of climate change. The donor conference’s commitments are more than twice as large as the nation’s current $4.56 billion in foreign exchange reserves.
