ISLAMABAD/KARACHI - The cash-starved Government of Pakistan on Friday repaid the fourth instalment of the Stand-by Arrangement (SBA) worth of $397.2 million to the International Monetary Fund (IMF), an official of Finance Ministry said.

The move came at a time when the Pakistani rupee sank to an all-time low against the dollar on high oil prices and foreign exchange reserve fears. The rupee fell to 94.75 to the greenback in trading in Karachi, down from 94.70 on Thursday, and has now lost 33 per cent of its value against the US currency since March 2008.

The official informed TheNation that Pakistan had to repay some $ 2.9 billion to the IMF during the fiscal year ending on June 30, 2013. Earlier, Pakistan repaid some $900 million in three instalments in the previous financial year (2012-13) and the total repayment reached $1.294 billion after Friday’s disbursement of $397.2 million.

The heavy repayment of $ 2.9 billion to the IMF within the current financial year is likely to put pressure on the country’s foreign exchange reserves, which are already depleting rapidly. The foreign exchange reserves declined to $15.182 billion during the week ending on August 17 as compared to the level of $15.298 billion a week ago. The reserves stood at around $18 billion few months back.

However, the Finance Ministry sources were of the view that the latest instalment of $397.2 million would not impact the foreign exchange reserves, which were at a comfortable level and enough for over three months imports.

Pakistan had entered into $7.6 billion IMF bailout package in 2008, 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. The government failed to bring reforms in General Sales Tax (GST) and power sector, which become the reason in suspending the programme.

Pakistan is required to retire the entire SBA loan by 2015 in major payments in the fiscal year’s 2012-13 and 2013-14.

On the other hand, the money market does not give an encouraging look. “The increase in the international oil price has affected Pakistan’s foreign exchange reserves and they could suffer further with the repayment of IMF’s instalment today (Friday),” said analyst Mohammad Sohail of Topline Securities, adding, “These factors have contributed to the panic in the currency market.”

In Asian oil markets, Brent North Sea crude for October delivery stood at $114.54 a barrel, while New York’s main contract, light sweet crude for delivery in October was at $95.68.

Sohail said the panic in the currency market might continue next week, if the international oil and commodity prices did not stabilise to a comfortable level.

The government has recently announced another increase in prices of petroleum products. The upward surge in prices of petroleum products has already spiralled rates of daily use commodities out of the reach of the common man.

The State Bank of Pakistan in its recent policy revision predicted that inflation in the country would remain in the double digits. World organisations have also been prodding the Pakistani government on checking prices since the country is amongst the states that are facing high food inflation.