KARACHI: After exhausting nearly all traditional sources of foreign exchange, it seems the government is now looking to tap the kindness of philanthropists to replenish its rapidly depleting dollar coffers.

But unlike the recent fund-raising campaign for dams, where the government remained front and centre, an upcoming drive to generate free-of-cost dollars from abroad will likely be led by social workers with a rock-solid credibility and proven track records.

Addressing a conference on Islamic finance via video link on Thursday, Finance Minister Ishaq Dar asked the central bank governor to coordinate with a group of philanthropists in their effort to raise dollars from overseas Pakistanis to overcome the foreign exchange shortage.

Mr Dar’s remarks came in response to a passionate announcement by Bashir Farooqi, founder and chairman of Saylani Welfare International Trust, that he would hold a press conference with other noted philanthropists to ask overseas Pakistanis for dollars.

Saylani founder says they will try to generate $2 billion in five years

Mr Farooqi said the leadership of the Akhuwat Foundation, The Citizens Foundation and Indus Hospital would join him in his attempt to raise funds to end the country’s liquidity crunch. They will try to generate $2 billion for five years, he said.

The funds won’t generate any profit for the depositors, meaning the scheme entails the parking of dollars for a fixed period of time without any cost to the exchequer.

The borrowed dollars will help bring back the lost jobs for “hundreds of thousands of people” as businesses will be able to open the letters of credit (LCs) for imported raw materials.

Speaking to Dawn on condition of anonymity, an economist associated with a research house said the drive appears to be a last-ditch effort to plug the external financing gap and pave the way for the signing of a letter of intent with the International Monetary Fund (IMF).

The government and the IMF are in the middle of negotiations to bring the $7bn loan programme back on track. The long delay in its revival has depleted the central bank’s foreign exchange reserves to $3.1bn, a level that’s not sufficient to cover the national import bill of even a single month.

The analyst said borrowing heavily on a non-commercial basis will be difficult given that the regular channels of foreign exchange from overseas Pakistanis — remittances and dollar-based Naya Pakistan Certificates — are already losing their attraction. Remittances dropped 19 per cent year-on-year to $2bn in December. Similarly, foreign inflows under Naya Pakistan Certificates stood at $190 million in the first six months of 2022-23 against the full-year target of $1.63bn.

In total, the country’s external debt repayment for 2022-23 stood at $21bn. After paying or rolling over some of this debt, Islamabad has to fork over $8bn between February and June, with the possibility of rollovers of up to $3bn.

Published in Dawn, February 3rd, 2023