Pakistan’s deputy PM sees mineral sector as key to repaying foreign debts

ISLAMABAD: Pakistan’s Deputy Prime Minister Ishaq Dar said on Thursday the country’s mineral sector could help generate a parallel revenue stream, reducing its reliance on external loans and enabling it to pay off foreign debts.

A $350 billion economy, Pakistan faces a chronic balance of payments crisis, requiring nearly $24 billion to repay in debt and interest over the next fiscal year, which is substantially more than the central bank’s current foreign currency reserves of $14.64 billion.

Last month, Pakistan reached a staff-level agreement with the International Monetary Fund (IMF) for a new $7 billion bailout after completing a short-term, $3 billion loan program in April this year.

The $3 billion facility helped Islamabad avert a sovereign debt default last year. The government says it seeks a fresh loan to keep its ongoing economic reforms on track.

“Pakistan has an abundance of tested and certified natural reservoirs of minerals, which have a proven cost of $10,000 billion,” the deputy PM said while addressing a ceremony at the Securities and Exchange Commission of Pakistan in Islamabad. “So, a $130 billion dollars liability is no challenge.”

Highlighting that Pakistan was an asset-solvent country, he called for streamlining the gemstone sector and make sure it was “properly exploited and explored” for sustainable economic development in the country.

Dar said Pakistan faced twin deficits in the shape of both fiscal and foreign accounts in the past, though he maintained they were manageable through comprehensive planning and economic reforms.

He noted the incumbent government’s main focus included structural reforms, bilateral trade and foreign direct investment, terming them imperative to get rid of dependence on foreign institutions.

“Pakistan has huge potential to join G-20 countries through structural reforms in the country’s economy,” he said.

In June this year, Pakistani exporters and traders of gemstones and jewelry items urged the government to adopt modern technological methods and remove restrictions to boost exports of these goods from the South Asian country.

Earlier, in May, Prime Minister Shehbaz Sharif emphasized the importance of developing Pakistan’s gems and precious stones sector, urging authorities to take steps to grant it industry status.

Sharif highlighted that Pakistan possesses immense natural resources, particularly in the regions of Khyber Pakhtunkhwa, Gilgit-Baltistan and Azad Jammu and Kashmir.

According to a report by Pakistan’s commerce ministry, the country’s exports of pearls and precious stones to China saw a 47 percent increase in 2023, reflecting a rising demand for these resources in China.