Pakistan’s foreign exchange reserves will hit over $12 billion when payment from China arrives this week

ISLAMABAD: Pakistan’s foreign exchange reserves will reach over $12 billion after receiving some $2.4 billion from China in the next two to three days, Finance Minister Miftah Ismail said on Thursday, a day before the presentation of the annual budget.

The 2022-23 budget will target an estimated GDP growth of 5%, down from 5.9% in the outgoing fiscal year, and introduce tough fiscal consolidation measures to meet the benchmarks set by the International Monetary Fund (IMF) .

Speaking at the launch of the annual economic survey report, Ismail also said Pakistan’s exports grew by 28% and imports by 48% in the current fiscal year 2021-22 compared to the last year, and the trade deficit was $45 billion.

With foreign exchange reserves falling below $10 billion, barely enough for 45 days of imports, a growing current account deficit, historic budget deficit and double-digit inflation, Pakistan is facing a balance crisis. payments.

Chinese money is important until the IMF clears its 7th review to resume funding a $6 billion bailout package agreed in 2019.

If the IMF review is approved, Pakistan will receive a tranche of $900 million, which will also unlock other sources of external financing.

The government that took over from ousted Prime Minister Imran Khan in April says it inherited a severe economic crisis.

Khan and his aides deny this, saying they have managed to achieve strong GDP growth despite COVID-19 shutdowns that have resulted in heavy losses for industry and commerce.

The economic survey said the economy rebounded from the pandemic, after suffering a 0.94% contraction in fiscal 2020, and maintained a V-shaped recovery by posting real GDP growth of 5.97% in FY2022, but that “this strong growth, however, is unsustainable and has led to financial and macroeconomic imbalances.”

“We need sustainable growth,” said Ismail, the finance minister, adding, “We have, thank God, already avoided a default.”

(Reporting by Asif Shahzad in Islamabad and Syed Raza Hasan in Karachi; Editing by Gareth Jones and Alex Richardson)

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