ISLAMABAD  - The country’s foreign exchange reserves will continue to face mounting pressure in next two to three years due to repayments of installments to the International Monetary Fund (IMF).

Pakistan is likely to knock the door of International Monetary Fund for another loan in current financial year 2012-13 in order to retire IMF’s Stand-by Arrangement (SBA) facility. According to an official, the burden of subsidies and higher security-related expenditures have badly affected the country’s fiscal system and adjustment path.

The government also failed to focus on growth-oriented policy for reducing unemployment in the country besides borrowing that needed to be reduced in order to further bring down the interest rate.

An official said the economy of the country has been badly hit by huge government borrowing, power and gas crisis and uncertain political and law and order situation.

The official said more foreign inflows were expected in the coming months from other donors especially after improvement in relations with the US. The US also disbursed $280 million for the energy.

The amount received $1.18 billion in Coalition Support Fund (CSF) from the US had given some space to the country’s economic trouble shooter to repay installments to the IMF on monthly bases.

Analysts however remained cautious, especially for current fiscal year 2012-13, saying the government may have to negotiate another loan programme with the International Monetary Fund (IMF) to ensure smooth repayment of the remaining installments to the IMF.

Pakistan repaid $1.2 billion to IMF in last financial year 2011-12, out of the total loan of around $7.6 billion. Pakistan has to pay around $2.9 billion during on going financial year, $3.43 billion in 2013-14 and $1.35 billion in 2014-15 to retire IMF outstanding loans.

A similar situation of foreign exchange reserves had compelled the government in 2008 to seek a $7.6 billion IMF bailout package, which was increased to $11.3 billion but the country was not eligible for the last two disbursements of $3.2 billion due to failure to comply with the performance criteria.