Pakistan has been struggling with its worst economic crisis in decades with its foreign exchange reserves at their lowest in 10 years. 
Pakistan has been struggling with its worst economic crisis in decades with its foreign exchange reserves at their lowest in 10 years. The crisis-hit Pakistan economy has received a fresh lifeline after US President Joe Biden proposed to double its economic support fund to cash-strapped Pakistan to $82 million for fiscal 2024. Pakistan, which is still recovering from devastating floods, has been struggling with its worst economic crisis in decades with its foreign exchange reserves at their lowest in 10 years.
On Friday, the US State Department said: “Assistance to Pakistan will expand private sector economic growth; strengthen democratic institutions; and advance gender equity and women’s empowerment.”
It added the additional assistance in Pakistan will support the country's recovery from devastating floods, diversify the energy supply, and support activities to build emergency preparedness capabilities. The additional aid for fiscal 2024, which will be given from October, has been added to the US State Department’s budgetary proposal which was sent to Congress, a PTI report said. Earlier, the US was offering support of $39 million in 2022.
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On Thursday, the US asked Pakistan to continue working with the IMF to improve its ailing economy and the business environment to "unlock" the much-needed funds from the global lender.
US State Department Spokesperson Ned Price said that the US is working with Pakistani partners and, in turn, it is working with international financial institutions, the IMF, to put itself on a sustainable growth path.
“Ultimately, it is going to have to be decisions on the part of our Pakistani counterparts to unlock this IMF funding. We encourage Pakistan to continue working with the IMF, especially on reforms that will improve Pakistan's business environment,” Price said.
Additional US aid for Pakistan
Pakistan is also proposed to receive $17 million under the international narcotics and law enforcement category and another $3.5 million under the international military education and training category, the US State Department said on Friday.
The administration has also proposed $32 million to Pakistan under the global health programme category by the US Agency for International Development (USAID).
Aid from IMF
Pakistan has been trying to get the next tranche of a $6.5 billion loan facility with the IMF. But it has been struggling to meet the conditions set by the Washington-headquartered financial body.
IMF had suggested raising tax revenues and a fairer distribution of precious resources by taking subsidies away from people who don't need them.
Pakistan following the conditions brought in its Finance (Supplementary) Bill 2023 or ‘mini-budget’, wherein it increased taxes on luxury goods and services in a bid to fetch additional tax revenues of Rs 170 billion by raising the GST rate from 17 per cent to 18 per cent.
The country has also raised the prices of fuel, and essential commodities, making it difficult for common people to fulfill their basic needs.
The agreement with the IMF on the completion of the ninth review of a $7 billion loan Extended Fund Facility programme, which is getting delayed since late last year over a policy framework, would lead to a disbursement of $1.2 billion of aid. Besides, it will also ensure fund inflows from friendly countries.
Aid from China
A few countries have already come forward and have helped the country by providing them with much-needed assistance.
In the last week of February, China gave a $700 million loan to Pakistan to help shore up its foreign exchange reserves. China is Pakistan's single largest creditor with its commercial banks holding about 30 per cent of its external debt.
Pakistan Finance Minister Ishaq Dar in a tweet said that the deposit by China has come as a "lifeline" for Pakistan. “AlhamdoLilah! Funds $700 million [were] received today by [the] State Bank of Pakistan from [the] China Development Bank."
The loan, which was routed through the state-owned China Development Bank, is expected to boost Pakistan's forex reserves by about 20 per cent.
Aid from Iran, Uzbekistan
Iran established six border markets to promote trade with crisis-hit Pakistan, said Iranian Consul General Hasan Noorain. In the last 10 months, the volume of bilateral trade between the two countries reached $2 billion, he said, adding that the target has been set at $5 billion.
Uzbekistan has also inked a $1 billion deal to increase bilateral trade with Pakistan during the Pakistan-Uzbekistan Inter-governmental Commission on Trade-Economic and Scientific-Technical Cooperation (IGC) meeting in Tashkent.
Both countries signed the agreement to encourage the exchange of goods and services, the Pakistan government said in an official statement.
(WIth PTI inputs)
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