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Pakistan to start repaying US$7 billion to IMF from next year
Commencing next year and spread over a 36-month time band, Pakistan will start repaying US $7.657 billion to IMF in shape of principal and interest payments against loan obtained from the Fund by the PPP government.
Ironically, to repay its earlier loan the country has no option but to seek a fresh programme to avoid pressure on the foreign currency reserves and to avoid defaulting on foreign liabilities, it is learnt.
Sources in Finance Division confirmed to The News on Wednesday that the government would have to start repayments of IMF loan, which it obtained under Standby Arrangement (SBA) programme, from the next budget 2011-12 and the first instalment would become due by February 24, 2012.
Pakistan will have to repay $1.386 billion to IMF in shape of principal amount and interest payments in financial year 2011-12, $3.218 billion in financial year 2012-13 and $3.053 billion in financial year 2013-14, bringing the total amount to $7.657 billion over the next three years, official data available with The News reveals.
While the PPP-led regime would have the nation believe that the foreign currency reserves stand at over $17 billion, and are citing it as an indicator of economic prowess and recovery, the fact is that this figure includes the loan amount of $7.1 billion, which Islamabad got from the Fund since November 2008 under SBA programme. Consequently, the foreign currency reserves will start depleting once the repayment of IMF loan starts from February 2012.
So there is no other choice available before the government but to strive hard to convince Washington-based IMF for granting favourable programme having least conditions, said the sources, who added that the Fund staff, however, seemed determined to instead incorporate toughest ever conditionalities attached to any programme in the history of Pak-IMF relations.
The IMF loan of $7.6 billion for Pakistan was augmented to $11.3 billion in 2009 but many insiders say that the Fund programme was suspended for the past one year as Islamabad had been unsuccessful in securing the last two tranches of $3.2 billion and this failure was termed as a blessing in disguise otherwise the foreign loans would have jumped up by at least another $3.2 billion.
It is relevant to mention that the IMF provided assistance to member recipient countries on the basis of Special Drawing Rights (SDR). The SDR is an international reserve asset, created by the IMF in 1969, to supplement the existing official reserves of member countries. SDRs are allocated to member countries in proportion to their IMF quotas.
The data shows that Pakistans liabilities in terms of SDRs would be standing at 942 million for repayments of the IMF loan, which in accordance with exchange rate against US dollar would be hovering around $1.386 billion in the next financial year.
Pakistan to start repaying $7bn to IMF from next year
Commencing next year and spread over a 36-month time band, Pakistan will start repaying US $7.657 billion to IMF in shape of principal and interest payments against loan obtained from the Fund by the PPP government.
Ironically, to repay its earlier loan the country has no option but to seek a fresh programme to avoid pressure on the foreign currency reserves and to avoid defaulting on foreign liabilities, it is learnt.
Sources in Finance Division confirmed to The News on Wednesday that the government would have to start repayments of IMF loan, which it obtained under Standby Arrangement (SBA) programme, from the next budget 2011-12 and the first instalment would become due by February 24, 2012.
Pakistan will have to repay $1.386 billion to IMF in shape of principal amount and interest payments in financial year 2011-12, $3.218 billion in financial year 2012-13 and $3.053 billion in financial year 2013-14, bringing the total amount to $7.657 billion over the next three years, official data available with The News reveals.
While the PPP-led regime would have the nation believe that the foreign currency reserves stand at over $17 billion, and are citing it as an indicator of economic prowess and recovery, the fact is that this figure includes the loan amount of $7.1 billion, which Islamabad got from the Fund since November 2008 under SBA programme. Consequently, the foreign currency reserves will start depleting once the repayment of IMF loan starts from February 2012.
So there is no other choice available before the government but to strive hard to convince Washington-based IMF for granting favourable programme having least conditions, said the sources, who added that the Fund staff, however, seemed determined to instead incorporate toughest ever conditionalities attached to any programme in the history of Pak-IMF relations.
The IMF loan of $7.6 billion for Pakistan was augmented to $11.3 billion in 2009 but many insiders say that the Fund programme was suspended for the past one year as Islamabad had been unsuccessful in securing the last two tranches of $3.2 billion and this failure was termed as a blessing in disguise otherwise the foreign loans would have jumped up by at least another $3.2 billion.
It is relevant to mention that the IMF provided assistance to member recipient countries on the basis of Special Drawing Rights (SDR). The SDR is an international reserve asset, created by the IMF in 1969, to supplement the existing official reserves of member countries. SDRs are allocated to member countries in proportion to their IMF quotas.
The data shows that Pakistans liabilities in terms of SDRs would be standing at 942 million for repayments of the IMF loan, which in accordance with exchange rate against US dollar would be hovering around $1.386 billion in the next financial year.
Pakistan to start repaying $7bn to IMF from next year
