IMF's Stand-By Arrangement: country to pay $500 million instalment this month

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Pakistan has to pay $500 million on account of an instalment of the Stand-By Arrangement (SBA) to the International Monetary Fund (IMF) during this month.

Sources in the Ministry of Finance told Business Recorder that although Pakistan was facing the challenge of depleting forex reserves compounded by slow foreign exchange inflows, arrangement were being made to avoid any delay.

"We are prepared for these payments. Pakistan will make the current payments in accordance with the schedule already decided between Pakistan and IMF," they added.

They said that arrangements are being made for timely payment of SBA instalments and despite several economic challenges, it will be on time.

According to the SBA agreement, Pakistan has to pay the IMF 1.1 billion Special Drawing Rights (SDR), equalling about $1.7 billion, during the second half of the current fiscal year on account of principal and interest of loans. (The SDR is an international reserve asset, created by the IMF in 1969 to supplement the official reserves of member countries. Currently, one US dollar is equivalent to about 1.6 SDR, but its value changes continuously.)

Of the total payments, so far nearly 32.42 million SDRs have successfully paid to IMF. However, major payments are due in February and May 2013, resulting in the depletion of the country's forex reserves. According to the payment schedule, a payment of 354 million SDRs is due during this month. In dollar terms, it comes to around $530 million.

A payment of 95.8 million SDRs (equivalent to $143 million) as principle amount of SBA is due on February 11, while another instalment worth 258.425 million SDRs ($387 million) has to be paid on February 26.

Another payment amounting to 381 million SDRs is due in May this year. This includes 10.1 million SDRs of GRA charges on May 1, 95.837 million SDRs of SBA and 17.228 million SDRs of repayment of IMF Extended Credit Facility on May 10. A major payment of 258.425 million SDRs is due on May 24 on account of SBA repayment.

In the meantime, the country's foreign exchange reserves declined to $13.549 billion as on January 25 this year against $15,236.1 billion on June 29 last year. Reserves held by the SBP, declined to $8.654 billion in January, down from $10,801 billion in June last year.

Courtesy: Business Recorder

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