ISLAMABAD  -  Pakistan’s foreign exchange reserves and rupee would once again come under severe pressure in next month (November), as cash-starved government would repay huge amount worth of $700 million to the International Monetary Fund (IMF) resulting in further reduction in foreign reserves.
Pakistan would repay $700 million to the IMF in five tranches during the month of November that would put additional pressure on the country’s currency and foreign exchange reserves, which are already sharply declining. Pakistan has already received first tranche worth of $550 million under Extended Fund Facility in early September and looking to get second worth of $550 million in December.
A high-level IMF delegation is currently visiting Pakistan for economic assessment of the country for releasing second tranche. The IMF’s review mission would stay till November 7. In the first round, the two sides will exchange data about various sectors of the economy. The IMF’s executive board is expected to meet on December 2 to consider approval of the second tranche worth $550 million, the official said, adding that Pakistan will face no problem in getting approval of the second tranche.
Pakistan’s balance of payments position is worsening compared to what had been projected by the IMF for the first quarter (July-September) of the current fiscal year 2013-14 and this is one of the targets missed by Islamabad for getting second tranche.
Pakistan and IMF agreed that gross foreign currency reserves held by the State Bank of Pakistan (SBP) should increase to $5.64 billion by the end of September, which stood at $4.824 billion, showing a gap of $816 million.
It is worth mentioning here that Pakistan would repay $3 billion to the Fund during ongoing financial year 2013-14 and would received $2.2 billion, which suggests that country’s foreign reserves would remain under pressure despite entering into new IMF programme.
However, finance ministry officials believed that reserves would improve in the months to come, as country would receive billion of dollars from different sources. In order to improve foreign inflows, the government has signed a deal with domestic and international banks to get short term loan facility to the tune of over $625 million which will help improve the country’s reserves position.
Similarly, the country is expecting to generate $1.5 billion from auctioning of 3G licences, due amount $800 million from Etisalat and also due amount from Untied States under the head of coalition support fund (CSF).