The first round of talks between Pakistan and International Monetary Fund (IMF) will start from September 25 in Dubai where Pakistan’s ability to pay back a remaining debt of approximately $6.4 billion will be reviewed.
According to an official, during the week-long talks, an IMF team will arrive in Islamabad to hold policy-level dialogue. A significant part of the parleys will involve meetings with President Asif Ali Zardari and Prime Minister Raja Pervaiz Ashraf.
The official said the amount received $1.18 billion in Coalition Support Fund (CSF) from the US had given some space to the country’s economic trouble shooter to repay installments to the IMF on monthly bases. The official said more foreign inflows were expected in the coming months from other donors especially after improvement in relations with the US as it had also disbursed $280 million for the energy sector last month.
The official said the country’s foreign exchange reserves will continue to face pressure due to re-payment of IMF loans in the next more than three years as Pakistan is likely to go to the International Monetary Fund (IMF) in fresh loan in current fiscal year 2012-13 to seek loan for the retirement of IMF’s Stand-by Arrangement (SBA) facility.
“The economy of the country has been badly hit by huge government borrowing, power and gas crisis and uncertain political and law and order situation, said an economic expert said. The burden of subsidies along with higher security-related expenditures exerted continuing pressure on the fiscal system and adjustment path was affected.
Analysts however remained cautious, especially for the current fiscal year, saying the government may have to negotiate another loan programme with the Fund to ensure smooth repayment of the remaining installments to the IMF.
Despite depressive economic situation of the country, the government had paid back total amount of $1.2 billion to International Monetary Fund during last fiscal year 2011-12 from foreign currency reserves held by the State Bank of Pakistan (SBP).
According to the repayment schedule agreed between Pakistan and IMF, Pakistan will repay its obtain $7.6 billion 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.
Pakistan had enter into a $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.
