ISLAMABAD: In a move that could provide financial muscle for Pakistan’s ongoing efforts to replenish its foreign exchange reserves, the All Pakistan Textile Mills Association (APTMA) has reportedly offered to raise up to $2 billion for placement with the State Bank of Pakistan (SBP) as the country prepares to repay an equal sum to the UAE.
The initiative, which seeks to bolster foreign exchange reserves, comes amid a time when repayments would have put a temporary strain on reserves.
According to Kamran Arshad, the chairman of APTMA, the textile industry is completely behind the government’s move to stabilize the country’s macroeconomic environment and manage external accounts without problems. He further mentioned that the new arrangement would compensate for the impact that repayment would have on the economic stability of the country.
Pakistan’s textile sector remains the country’s largest export-oriented industry and has recently recorded improved export performance due to rising foreign demand.
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Managing Impact of UAE Repayment
The government is due to pay back the $2 billion debt to the United Arab Emirates within the month. This amount was initially kept under foreign currency assistance programs.
According to the market players, the involvement of the private sector in the management of the external account signals the increasing confidence in the measures taken by the government to stabilise the economy.
Pakistan has recently been able to satisfy some conditions imposed by IMF reform programs, mainly focusing on fiscal responsibility and monetary policy.
Experts feel that sustained compliance with policies, coupled with involvement of the private sector, can enhance macroeconomic stability and help make the external account position resilient in the coming months.
