The International Monetary Fund (IMF) has overstated Pakistan’s foreign currency reserves by a whopping $3 billion for outgoing fiscal year, denting its credibility, which has already come under criticism because of huge variations between its projections and actual results.
IMF’s data released late last week suggested that Pakistan’s external financing requirements would rise to $17 billion in the next fiscal year, but the global lender did not show any negative implication on the official forex reserves.
On June 16, the IMF issued a communiqué after concluding Article IV consultations, showing official foreign currency reserves to be at $18.5 billion by the end of this fiscal year. However, the figure appeared totally off the mark.
As of June 9, forex reserves held by the State Bank of Pakistan (SBP) stood at $15.3 billion, the central bank’s data showed.
It is highly unlikely that the country will be able to increase the reserves at a time when the reserves have come under massive pressure because of rising trade deficit.
The $15.3 billion foreign currency reserves are also $5.5 billion less than what the IMF had projected in its 12th review report on Pakistan’s economy, released in October last year.
For the outgoing fiscal year 2016-17, the IMF had originally projected the current account deficit at 1.5 per cent of Gross Domestic Product (GDP) or equivalent to $4.5 billion. However, now it has revised the deficit projection to over $9 billion, which is double than the original projection, bringing the foreign currency reserves under pressure.
However, in its Annual Plan 2017-18, the federal government put the current account deficit at $8.6 billion, or $2 billion lower than IMF’s projections and $4.4 billion lower than the projections of independent economists.