Indebted to lack of payments


The aid-dependent Pakistan may face unpleasant implications for exchange rate due to foreign debt repayments in current financial year 2012-13 which in return will fuel inflation due to increasing cost of imported goods. The approved current 2012-13 fiscal year financial year’s development budget and annual plan said the country’s gross official reserves may d eplete to $8.24 billion by June 2013 which is 28 per cent or $3.2 billion, lower than what has been projected for last financial year 2011-12. An official working in the Finance ministry told “Online” that in current financial year 2012-13 unavoidable, international and domestic contractual and obligatory payments will be considered on case to case basis and relaxation if required may be allowed by the Finance Secretary The current account deficit – gap between total foreign receipts and payments –is expected to widen to $5.3 billion or 2.1 per cent of total size of economy during on going fiscal year. According to the repayment schedule agreed between Pakistan and IMF, Pakistan will repay its $7.6 billion debt to the IMF till the end of fiscal year 2014-15. The $11.3 billion SBA program had expired on September 30, 2011 and the last two trenches of $3.7 billion could not pay to Pakistan by IMF following Islamabad’s failure to pursue key reforms as well as the emergence of the revenue figures fiasco. Despite depressive economic situation of the country, the government had paid back total amount of $1.2 billion to International Monetary Fund during fiscal year 2011-12 from foreign currency reserves held by the State Bank of Pakistan (SBP). Pakistan had entered into $11.3 billion programme in 2008 with IMF and got disbursements of about $7.6 billion, but failed to get the remaining $3.7 billion due to slippages in performance criteria, leading to suspension of the programme in May 2010 and was ended unsuccessfully on September 30,2011.