Pakistan: According to preliminary estimates, the country's already cash-strapped economy has suffered a loss of $ 30 billion due to the devastating floods. To help resolve the crisis, the Shahbaz Sharif-led administration has turned to other countries.
Finance Minister Mifta Ismail told Reuters in an interview that despite the destruction caused by months of flooding, Pakistan would "absolutely not" default on its foreign debt obligations.
The minister, who was successful in securing a bailout package from the IMF in August, announced that the Pakistani government would turn its attention to reforms to stabilize the economy.
The long-awaited $1.17 billion bailout package for Pakistan was earlier approved by the IMF. The country currently has foreign exchange reserves of $8.6 billion, which is equivalent to 40 days' worth of import expenses.
Former PM Imran Khan's PTI is fiercely opposing the Sharif government's decision to reduce fuel subsidies by raising prices to unprecedented levels.
Ismail estimates that Pakistan will increase its foreign exchange reserves by at least $4 billion, despite mounting pressure on the current account balance due to a possible increase in the volume of imports of cotton and food items.
Agriculture-dominated exports are also under tremendous pressure as a result of the destruction of crops in the food-basket provinces of Sindh, East Punjab and Balochistan due to floods.
The minister acknowledged that investors were "annoyed" about Pakistan, noting that the economy had lost at least $18 billion and possibly $30 billion due to the floods.
Yields on Pakistan's five-year sukuk, Sharia-compliant bonds, which mature in December 2022, fell by a staggering 39 per cent last week, despite the revival of the International Monetary Fund's (IMF) bailout package. This reflects a sharp decline in investor confidence in the economy.
Ismail claims that external funding sources including more than $4 billion were received from the World Bank, the Asian Infrastructure Investment Bank and the Asian Development Bank (ADB). Meanwhile, Saudi Arabia has given huge relief to the government by taking a loan of $3 billion for one year on the current terms.
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