Pakistan to repay IMF $541.47m by end-June

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KARACHI: Pakistan will repay approximately $541.47 million worth of debt to the International Monetary Fund (IMF) by June 30, say analysts.



The payments have to be completed under the international lending agency’s standby and extended credit facility arrangements with the government.


Three principal loan repayments to the IMF remain at the moment.


According to the IMF calendar available on its website, Pakistan has to pay 258.425 million special drawing rights (SDR) against the stand-by arrangement facility on Friday (May 24).


One special drawing right is equivalent to $385.62 million (1 SDR = $1.49206).


Other payments due are $12.852 million (8.614 SDR) under extended credit facility (ECF) and $142.99 million (95.837 SDR) against SBA on June 28, 2013, respectively, making a total of $ 155.842 million (362.90 SDR) by the end of the current fiscal year.


A spokesman for the central bank said two payments - amounting to $144.68 million (95.84 million SDR) against the SBA and $17.22 million (26.01 million SDR) under ECF had been made on May 10.


Analysts said that the central bank was misguiding people by disseminating wrong statistical information on the external repayments.


Earlier, the central bank confirmed that it had paid $114 million to the IMF on May 10, while later rectified the amount.


The worst victim of the IMF debt repayments is the Pakistan’s current account balance, which has been deteriorating since the second quarter of this fiscal year.


The current account posted a deficit of $1.418 billion during July-April 2012-13.


It shows Pakistan foreign increased debt servicing burden and decline in foreign exchange earnings affecting the debt servicing capacity of the country,


The central bank’s forex holding also squeezed to $6.3 billion during the week ending May 17. Similarly, the total liquid reserves held by the country also declined to $11.4 billion a week ago.


“The forex reserves of the central bank seem to be sufficient for import cover of less then two months, said Sayem Ali, an economist at Standard Chartered Bank.


“With the IMF repayments due on May 24 and June 28, the forex holdings of the State Bank will approximately dip to $5.8 billion at the end of June 2013,” Ali said.


“If the repayments to other foreign creditors are included, the SBP’s reserves will stand at $5.5 billion,” he added.


Added to this are dim prospects of fresh external inflows to the country.


The state bank’s foreign exchange reserves have also dipped below comfort level.


Analysts warn that this is a clear indication that the country is heading towards a serious balance of payments crisis.


This situation also puts a serious question mark on the reserves adequacy ratio and the debt servicing capacity of the country in months to come.


It reflects that Pakistan is going towards default on external payments and will still be in need of IMF assistance.


There is some still some hope of escaping the crisis - especially the recently discussed $15 billion soft loan from the Saudi Arabia materialize.


Atleast $1.8 billion inflows are also expected under the head of coalition support fund (CSF).Combined these potential foreign inflows could provide a cushion to the weakening balance of payments. In particular, the Saudi Arabian loan will give relief to the country’s oil import bill.

Courtesy:  The News


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