ISLAMABAD - Pakistan is likely to approach the International Monetary Fund for a fresh bailout package of $5billion to avert a crisis on balance of payments, it has been learnt.
The outgoing PPP-led coalition government has decided not to approach the IMF before the next elections, but the caretaker set-up might seek a fresh bailout to avert the eruption of a currency crisis, sources said on Saturday.
Despite the fact that the foreign currency reserves are sharply depleting, the incumbent government believes there will be no balance of payments crisis in the next few months.
Finance Minister Saleem Mandviwalla the other day said there would be no currency crisis, as the foreign currency reserves were 'manageable'.
Pakistan's foreign exchange reserves were recorded at $13.185billion during the week ended on February 22, wherein the central bank hold reserves stood around $8.227billion and commercial banks reserves at $4.958billion.
Finance Ministry officials are of the view that the forex reserves might decline to $7.5billion to $8.5billion at the end of the current fiscal year, 2012-2013, due to a heavy repayment to the IMF.
There would be tremendous pressure on balance of payments in April-June 2013 period. Sources said the government would have no other option but to approach the IMF for a bailout of $5billion in the months to come.
According to media reports, State Bank of Pakistan Governor Yaseen Anwar has opposed a new IMF programme for the time being, stating that even though the domestic forex reserve position was challenging, it was fairly manageable.
Pakistan has paid over $3.2billion to the IMF since July 2012 putting pressure on the already depleting foreign exchange reserves. The country's external account is under extreme pressure since the inflows were negligible during the year 2012, while outflows eroded the reserves. The remaining amount due under the IMF/SBA (standby arrangement programme) until September 2015 is $3,239million. The remaining repayments to the IMF and other international financial institutes would certainly hit the country's external position with weak reserves and sharply declining foreign investments.
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.
Sources said in the next financial year, Islamabad would have to repay $3.4billion to the IMF. Hence, Pakistan would have no option, but to seek a fresh bailout package from the IMF to remove the possibility of a default.