The release of information recently by multiple sources has highlighted some worrying trends in external financing inflows into Pakistan.

The SBP (State Bank of Pakistan) has put on its website information on the balance of payments for July 2024 to January 2025.

The Ministry of Economic Affairs has simultaneously released the information for up to December 2024 and January 2025 on external disbursement of foreign assistance during 2024-25.

The Ministry of Finance has highlighted its fiscal operations, along with that of the provincial governments, in the first half of 2024-25. This also provides information on the extent of net external financing of the budget deficit.

All three sources clearly show a significant decline in external inflows, both public and private, into Pakistan in the first half of 2024-25. The decline is large enough to have led to a negative net inflow after the outflows of external debt repayment.

The concern is due to the fact that the country has been operating under the umbrella of a US$7 billion three-year Extended Fund Facility of the IMF since September.

The IMF Staff Report has been positive about larger net external inflows, both from public and private, in 2024-25. The expectation is that over the year, inclusive of the IMF financing, there will be a net inflow of US$3,376 million, leading thereby to a corresponding increase in the foreign exchange reserves of Pakistan.

The magnitude of external inflows according to the Ministry of Economic Affairs up to December 2024 has been $3,601 million. This is in relation to the annual target of $10,291 million,........

© Business Recorder