islamabad - Pakistan’s foreign reserves would come under severe pressure within ongoing month, as country would repay $533 million to the International Monetary Fund (IMF) under Stand-by Arrangement (SBA) loan facility in May 2013.
Sources informed that Pakistan would make repayment under IMF’s SBA loan facility in three equal phases amounting $533 million during this month that would put pressure on the depleting foreign reserves of the country. The total liquid foreign reserves held by the country stood at $11.938 billion on 19th April 2013. Foreign reserves held by the State Bank of Pakistan are $6.817 billion and net foreign reserves held by commercial banks are $ 5.121 billion. Pakistan has already paid around $3.24 billion against the total fund of $7.80 billion.
The country has hardly two-and-a-half-month import bill amount, which it has to provide in shape of L/Cs, food import bills, edible oil import bills and crude oil bills. The rupee is likely to remain under pressure because of IMF repayments as the foreign exchange reserves were still declining.
The newly elected government would have to go to the IMF for seeking new funds for a stable international rating besides for a stable and credible government to obtain fresh external funding from other international donors.
The IMF has already offered the extended fund facility (EFF) of $5 billion to bail out Pakistan after the May 11 elections. The IMF is expected to hold talks with the new elected government in June before the announcement of federal budget 2013-14.
“In case the new government decides to go for the EFF IMF loan programme and additional financing from the World Bank and ADB, the government would be required to take some key measures like adjusting power tariff, expenditure management and levying new taxes or broadening of the tax base”, said an official of the finance ministry while talking to The Nation on Wednesday.
Pakistan would repay almost $1 billion of IMF loan in the remaining two months of the ongoing fiscal year 2012-13 and $3.2 billion in the upcoming fiscal year 2013-14. Hence, Pakistan would have no option, but to seek a fresh bailout package from the IMF to remove the possibility of a default. The government is repaying the loan, $7.6 billion, taken in 2008 under the SBA, which was increased to $11.3billion, but the country was not eligible for the last two disbursements of $3.2billion due to its failure to comply with the performance criteria. The government failed to bring reforms to the General Sales Tax (GST) and the power sector, which became the reason behind of the suspension of the programme.