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Business Recorder
3 days ago
- Business
- Business Recorder
External financing in FY2025-26
One of the key indicators in the federal budget is the projected level of external financing to partly finance the budget deficit. The expectation in 2024-25 was that there would be total external financing inflow of approximately US$10.3 billion into the federal government account, excluding rollovers. Net of repayment the financing was expected to be US$2.3 billion. The Ministry of Economic Affairs has recently reported on the gross inflows up to the end of April 2025. They have aggregated to US$5.7 billion, equivalent to only 55 percent of the annual target. They should have reached 83 percent of the annual target by the end of April. The biggest shortfall is in commercial loans. The target is US$3.8 billion, whereas the actual loans received aggregate to less than US$0.8 billion. Given the enhanced risk perceptions of lending to Pakistan, it is not surprising that private creditors have reduced their exposure to Pakistan. The surprising outcome is the significant shortfall also in inflows from multilateral development agencies. The Asian Development Bank is, more or less, on target and has disbursed 76 percent of its annual commitment by April. However, the big shortfall is in the inflows from the World Bank. Only 51 percent of the annual target has been met up to April. The IMF Staff Report of the 17th of May, following the first review of the IMF Programme, contains estimates of the likely inflow of external financing by the end of 2024-25. These IMF estimates include the requirements of inflows to the private sector in Pakistan. The good news is that the expectation is of a gross inflow of US$18.9 billion, including rollovers, which will be $2.5 billion above the requirements of amortization of debt. The expectation is that the foreign exchange reserves of the SBP will rise by $4.5 billion by the end of 2024-25. US$2 billion will be the inflow from the IMF, which has already taken place. Consequently, the projection is that by end of June 2025, the level of foreign exchange reserves will reach US$14 billion. This will provide import cover of 2.8 months and put Pakistan in a somewhat more secure position. There is need, however, to appreciate that total external inflows, of both foreign direct investment and loan financing, will be significantly smaller in 2024-25. Inclusive of inflows into the private sector, the IMF estimate of the actual external financing of Pakistan is US$20.9 billion. This is 23 percent less than the total inflow of US$26.3 billion in 2023-24. We turn now to the outlook for 2025-26. The first part of the external financing requirement is the size of the current account surplus or deficit in the balance of payments. The IMF Staff report has projected a small deficit of US$1.5 billion. Exports are expected to show a growth rate of 5.4 percent, while imports are projected to increase by 3.4 percent. The turmoil in the global trade after the US announcement of higher tariffs is likely to adversely impact on the volume of global trade. Further, the shortfall in major crop outputs like cotton and wheat will raise the volume of agricultural imports. Also, if a target GDP growth rate of 3.6 percent is to be achieved then this will imply larger imports of inputs and capital goods. The IMF has been cautious about the level of remittances, which are likely to increase by 20 percent in 2024-25, and are the main reason for a near zero current account deficit. The expectation is that they will fall marginally in 2025-26. Also, only 3 percent growth is anticipated in interest payments and repatriation of profits. The latter may be significantly higher due to increase in risk perceptions about investment in Pakistan. Overall, there is the risk that there may be a larger deficit in the current account in 2025-26, which could approach US$4 billion, equivalent to almost 1 percent of the GDP. The balance of payments projections of the IMF for 2025-26 are based on a double-digit depreciation of the rupee. The projection of the level of amortization of external debt, both public and private, is of a significant increase of almost 18 percent. It is expected to rise from US$14.7 billion in 2024-25 to US$17.3 billion in 2025-26. Fortunately, repayment to the IMF will be less by almost $1 billion. Turning to the available financing, the IMF has been cautious about the projection of foreign direct investment in 2025-26. The expectation is that it will remain at the same level as in 2024-25 of US$2.1 billion. However, the tense security situation may lead to some postponement of investments in South Asia. Further, the IMF is also not expecting significant increase in the disbursement of loans in 2025-26. They are projected at $17 billion as compared to US$16.7 billion in 2024-25. Overall, the lack of optimism in the IMF projections is clearly indicated by the expectation that the available financing will be virtually the same as the total external financing requirement of US$19.3 billion. This is in contrast to the expected surplus of US$2.5 billion from sources other than the IMF in 2024-25. The assumption in the projections is that the IMF Programme will continue throughout 2025-26. Two reviews during the year will be successfully completed and Pakistan will meet the quantitative performance criteria and implement the agreed agenda of reforms. Uninterrupted continuation of the IMF Programme in 2025-26 will lead to a loan disbursement of $2 billion from the IMF. In addition, there will be some inflows from the resilience facility, which has not yet been included in the IMF projections. Overall, Pakistan's reserves are projected to increase by $2 billion. In addition, there could be other prospective financing of US$1.4 billion. Overall, the above IMF projections indicate a relatively high level of risk and uncertainty in the level of external financing in 2025-26. The requirement may be higher because of a larger current account deficit and the need for purchase of armaments. Foreign direct investment may be adversely affected by the security situation. On top of all this, Pakistan will have to continue performing well within the framework of the IMF Programme. Copyright Business Recorder, 2025
Business Recorder
28-05-2025
- Business
- Business Recorder
New World Bank country director calls on Cheema
ISLAMABAD: The newly-appointed Country Director of the World Bank, Bolormaa Amgaabazar, called on Federal Minister for Economic Affairs Ahad Cheema, here on Tuesday. The outgoing Country Director Najy Benhassine was also present during the meeting. The minister welcomed Amgaabazar and appreciated the contributions of Benhassine during his tenure in Pakistan. He acknowledged Benhassine's role in strengthening the World Bank's engagement with Pakistan and setting high standards of partnership. Cheema expressed confidence that the new country director would continue to play a key role in the development and implementation of the Country Partnership Framework (CPF), building on the work done under Benhassine's leadership. The minister highlighted that the federal government, with the support of the World Bank and other development partners, is actively facilitating provincial governments in the execution of development projects. He also reiterated the government's strong commitment to fiscal, energy, and economic reforms, noting that the focus remains on policies that deliver long-term, sustainable outcomes for the country. The World Bank team appreciated the government's efforts in driving reforms and strengthening collaboration with provincial governments. They acknowledged the central role played by the Ministry of Economic Affairs in ensuring effective coordination and implementation of development initiatives. Copyright Business Recorder, 2025
Business Recorder
28-05-2025
- Business
- Business Recorder
New WB country director calls on Cheema
ISLAMABAD: The newly-appointed Country Director of the World Bank, Bolormaa Amgaabazar, called on Federal Minister for Economic Affairs Ahad Cheema, here on Tuesday. The outgoing Country Director Najy Benhassine was also present during the meeting. The minister welcomed Amgaabazar and appreciated the contributions of Benhassine during his tenure in Pakistan. He acknowledged Benhassine's role in strengthening the World Bank's engagement with Pakistan and setting high standards of partnership. Cheema expressed confidence that the new country director would continue to play a key role in the development and implementation of the Country Partnership Framework (CPF), building on the work done under Benhassine's leadership. The minister highlighted that the federal government, with the support of the World Bank and other development partners, is actively facilitating provincial governments in the execution of development projects. He also reiterated the government's strong commitment to fiscal, energy, and economic reforms, noting that the focus remains on policies that deliver long-term, sustainable outcomes for the country. The World Bank team appreciated the government's efforts in driving reforms and strengthening collaboration with provincial governments. They acknowledged the central role played by the Ministry of Economic Affairs in ensuring effective coordination and implementation of development initiatives. Copyright Business Recorder, 2025
Yahoo
23-05-2025
- Business
- Yahoo
Stockpiling strategic materials key to 'remilitarisation of Europe'
European security and defence were high on the agenda at the EIT RawMaterials Summit, held in Brussels from 13 to 15 May. With escalating geopolitical tensions surrounding Europe and within the continent itself from the ongoing Russia-Ukraine war, securing critical raw materials (CRMs) for defence applications is more important than ever. However, the consensus is that Europe is lagging far behind. Allard Castelein, special representative for raw materials strategy at Netherlands' Ministry of Economic Affairs, stated: 'A deep concern I have is whether there is a full appreciation of the urgency and what it takes to move from A to B.' He was speaking during a panel entitled Geopolitical Dynamics in Securing Europe's Defence Supply Chains on 14 May. Castelein asserted that the 2030 targets of the European Critical Raw Materials Act (CRMA) are 'out of reach'. These aim to ensure that 10% of the EU's annual demand is met through domestic extraction, 40% through domestic processing and 25% through recycling within the EU, as well as limiting dependency on a single third country for any individual CRM to no more than 65%. The CRMA lists 34 materials, of which 17 are considered 'strategic': bauxite, bismuth, boron, cobalt, copper, gallium, germanium, rare earth elements for permanent magnets, lithium, magnesium, manganese, graphite, nickel, platinum group metals, silicon, titanium and tungsten. The panellists spotlighted the importance of graphite in aircraft, submarines, tanks and missiles, for which Europe is heavily dependent on China. Of the CRMA's 47 strategic projects, 11 cover graphite extraction, recycling, substitution and processing. Institutions like the European Investment Bank (EIB) have a role to play in financing, as EIB vice-president Nicola Beer explained. 'The bank is already engaged with about 60% of the strategic projects under the CRMA. Part of the complex challenge is working on specific challenges of every raw material separately, with a special emphasis on defence.' Emanuel Proença, CEO of Savannah Resources, told Mining Technology: 'Europe absolutely needs a footing in CRMs and defence is a key opportunity.' Savannah is developing the Barroso lithium project in Portugal, which has been designated as a strategic project under the CRMA. The company is currently working towards completing the definitive feasibility study and submitting it for the final, confirmatory phase of the environmental licence by the end of 2025. Efforts by industry and regulators aim to address the 'fragmentation in the EU's defence industrial base', as outlined by last year's Draghi report on EU competitiveness. As the CRMA includes a soft request for national stockpiles, the report recommends a definition of mandatory EU-wide stockpiles to 'provide some certainty of supply'. The quantities of strategic materials needed for defence are small, confirmed Benjamin Gallezot, Interministerial Delegate for Supplies of Strategic Minerals and Metals at the French Prime Minister's Office, as he emphasised the importance of stockpiling. 'In 2023, the French Government adopted a specific legal framework which makes stockpiling mandatory for companies that are active in defence and for all production activities to be redirected to defence in times of emergency,' he stated. 'You cannot take a chance on defence, and stockpiling is a no-brainer.' In agreement was Joaquim Nunes de Almeida, director of DG Grow, which works to develop and implement EU policies that support businesses. 'We are talking about small quantities and projects that will be uncommercial forever. The state and public sector has to be able to subsidise these as we calculate what the remilitarisation of Europe means in terms of CRMs.' Gallezot confirmed that France is supplying the Netherlands with CRMs. 'Stockpiling is a European matter, not just a national question, but within member states, commercial stockpiles also help in a crisis to increase defence applications.' The CRMA requires large EU companies to become aware of strategic material supply risks and create appropriate mitigation strategies to be better prepared in case of supply disruptions. For defence-related manufacturing, this includes robotics, drones, rocket launchers, satellites and advanced chips. Joining the other panellists was Oleksandr Kubrakov, adviser to Ukraine's Ministry of Defence, who explained the country's tough position. 'In recent decades, the Ukrainian mining industry has been focused on short-term projects as there was no political stability for longer-term foreign investments,' Kubrakov said. While calling for NATO membership, Kubrakov added that as Ukraine is currently in an accession process to join the EU, 'it is time to act again. European companies could participate in projects at feasibility stages right now.' Going forwards, Krzysztof Galos, Undersecretary of State in Poland's Ministry of Climate and Environment, asserted that Europe's CRM list must be continually updated to meet the evolving needs of the defence sector. The list is reviewed and updated by the European Commission every three years, allowing for additional reviews upon request from the European Critical Raw Materials Board, based on monitoring and stress testing. 'There is no use having a defence industry without having resilient industrial activity. The two must be brought together,' concluded Castelein. "Stockpiling strategic materials key to 'remilitarisation of Europe'" was originally created and published by Mining Technology, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
India Gazette
21-05-2025
- Business
- India Gazette
Taiwan marks highest ever April exports, driven by rising global demand of AI's
ANI 21 May 2025, 12:07 GMT+10 New Delhi [India] May 21 (ANI): Taiwan registered its highest ever export orders for April, helped by rising demand for artificial intelligence (AI) applications from across the globe, according to the Taiwan's Ministry of Economic Affairs (MOEA) as reported by Focus export orders were at USD 56.40 billion for April 2025, marking a rise of 19.8 per cent on year on year basis. Exports out shadowed MOEA's forecast of USD 50 billion to USD 52 billion. This marks the third consecutive month of annual to MOEA data, the total value of export orders for the first four months of 2025 reached USD 205.87 billion, a robust 14.1 per cent increase compared to the same period last Yu-ling, director of MOEA Department of Statistics attributed this rise to growing global investment in AI, high-performance computing, and cloud services. He also added that the 90-day suspension of reciprocal tariffs by the Donald Trump administration of the United States on April 9 prompted some buyers to place orders ahead of schedule. The electronics sector emerged as the primary driving force behind this growth, with April orders reaching USD 23.09 billion, a substantial 35 per cent increase year-on-year. This surge was fuelled by strong global demand for advanced semiconductors and printed circuit boards (PCBs).Regionally, the United States stood out as Taiwan's top customer in April, placing USD 19.29 billion in orders, marking a significant 30.3 per cent increase, primarily for electronics. China and Hong Kong followed, with combined orders of USD 11.30 billion, representing a 5.7 per cent ahead, Huang anticipates that strong demand related to AI will continue to benefit Taiwan's technology exporters. Nevertheless, she cautioned about potential risks to global economic growth stemming from geopolitical tensions and U.S. trade MOEA has forecasted May export orders to fall within the range of USD 55 billion to USD 57 billion, indicating an expected year-on-year increase of 12.5 to 16.6 percent. (ANI)
