Pakistan may seek more IMF loan to clear debt

[Big Boss]

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Pakistan may seek more IMF loan to clear debt


By Razi Syed

KARACHI: Pakistan is likely to go to the International Monetary Fund (IMF) in fresh fiscal year 2012-13 to seek loan for the retirement of IMF’s Stand-by Arrangement (SBA) facility, sources in the Ministry of Finance said on Tuesday.

The country will have to pay more than $7.82 billion in four different instalments from 2011-12 to 2014-15, sources said.

Pressure on foreign exchange reserves is also affecting the overall economy of the country.

State Bank of Pakistan Governor Yaseen Anwar on Tuesday said printing of currency by the government to meet expenditures besides heavy borrowing amounting to Rs 442 billion from central bank till May 2012 has also affected the country’s economic condition.

He however, said that the central bank was capable to make payments of IMF instalments, but downward trend in forex receipts would make the repayment of loans instalments difficult.

Pakistan has to pay $3.4 billion in 2012-13, $3.43 billion in 2013-14 and $1.35 billion in 20114-15 to retire IMF outstanding loans, said a foreign currency expert in Texas USA Fazal Ahmad.

Talking to Daily Times, he said Pakistan would possibility face a 3-5 percent increase in value of IMF loans repayment due to dollar-rupee parity in the next three to four years.

The country’s foreign exchange reserves will continue to face pressure due to payment of IMF loans in the next more than three years, he added.

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.

The IMF is still pressurising Pakistan to initiate economic reforms to tackle challenges the country is facing.

However, the government is still unable to implement key benchmarks agreed with the IMF, bringing the central bank’s borrowing to a desired limit, enforcing general sales tax (GST) on goods and services in integrated mode, eliminating power sector subsidies and keeping the budget deficit within the agreed limits.

The move by Pakistan government to choose short-term gains over long-term economic stability is risky.

The IMF wants Pakistan to raise tax revenue from the present 10 percent of gross domestic product (GDP) to 15 percent of GDP by 2013, which is peril for the economy.

The burden of subsidies along with higher security-related expenditures exerted continuing pressure on the fiscal system and adjustment path was affected.

The government failed to focus on growth-oriented policy for reducing unemployment in the country besides borrowing that should be reduced in order to bring down the interest rate.

The IMF is not happy over the performance of Pakistan government as the government failed to lessen Rs 1 trillion financial deficit besides provided power subsidy of Rs 295 billion, which annoyed the donors.

The fund also put a proposal before Pakistan that surplus cash crops would be kept under the IMF supervision, he added.

There is a compulsive need for reorientation of fiscal approach from external assistance to boosting of agricultural and industrial production, which has unfortunately remained static for years now, he added.

During the first 10 months of FY 2011-12, remittances from overseas Pakistanis rose by 20.2 percent to $10.877 billion, which helped balance of payments despite widening of trade deficit.

During the current fiscal year until May 18, 2012, Pakistan has made debt payments amounting to $2.53 billion (inclusive of $809 million to IMF) and other miscellaneous payments of $1.52 billion, while receipts from multilaterals and others amounted to $1.21 billion.


Daily Times - Leading News Resource of Pakistan


Without reforms all the loans/aid/donations will go in the black hole

[The HBS Guy]

Why should the IMF help Pakistan. The Pakistanis have failed to implement any of the reforms that the IMF told them to implement earlier. They have not even enacted RGST yet. Besides, didn't the Pakistanis show the middle-finger to the IM and WB some time back? Correct me if I'm wrong.

When you're not willing to implement their recommendations, why ask them for help?

[American Pakistani]

Correct your title, it should be "Zardari to take more loans/aids in the name of Pakistan before elections".

I don't know why SC or even military is quiet on this issue, zardari regime has taken 35billion$ loan in these 4 years of rule, compare it with 30 billion $ in entire 60years before zardaria regime.

[illusion8]

Correct your title, it should be "Zardari to take more loans/aids in the name of Pakistan before elections".

I don't know why SC or even military is quiet on this issue, zardari regime has taken 35billion$ loan in these 4 years of rule, compare it with 30 billion $ in entire 60years before zardaria regime.

That was funny also Pakistani Rupee has depreciated by more than 46% since 2008, when Zardari and Co took over.

The Military is quiet because they want to see through Zardari's term. Remember Memogate of how Zardari ran to US to save his Government. I think the PA and GHQ want this Government to go through the term so that it will become the only democratic government in history to complete a term in Pakistan.

[cricketrulez]

RiazHaq, where are you? you of the great Singularity university of silicon valley! (screw the other unis like Stanford and Cal, singularity is the BOMB)

Are you going to weigh in on this matter?

[Great Sachin]

Loan paid by another loan...good luck to Pakistan Economy

[AbhimanyuShrivastav]

RiazHaq, where are you? you of the great Singularity university of silicon valley! (screw the other unis like Stanford and Cal, singularity is the BOMB)

Are you going to weigh in on this matter?

Wait for it.. He will come up with some 2 year old blog entry talking about how despite to the contrary assessment of UNO, Pakistan has a better education record than India

Loan paid by another loan...good luck to Pakistan Economy

Anyone aware of the exact Interest cost that Pakistan pays every year against the outstanding external debt?

[SamranAli]

Zardaari don't dig a hole for next Govt.

[Ajaxpaul]

Financial, social and educational reforms are necessary before more loans.

[Chinese-Dragon]

Indians should worry about their own economy first.

Indian GDP growth falls to 5.3% - Financial Times

Oops, looks like another downgrade is coming. The Rupee also hit a record low today as well.

[jbgt90]

Indians should worry about their own economy first.

Indian GDP growth falls to 5.3% - Financial Times

Oops, looks like another downgrade is coming. The Rupee also hit a record low today as well.

you sure you are a Chinese mate ?you spend most of your time defending Pakistan .

Pakistan has to go to the IMF , they have no other option , no other country is willing to give them financial help , the one which did (US) have been alienated.

[Chinese-Dragon]

you sure you are a Chinese mate ?you spend most of your time defending Pakistan .

Pakistan has to go to the IMF , they have no other option , no other country is willing to give them financial help , the one which did (US) have been alienated.

And the Indians here spend most of their time attacking China.

What exactly did you think our response was going to be?

[AbhimanyuShrivastav]

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And the Indians here spend most of their time attacking China.

What exactly did you think our response was going to be?

Talking about India in a thread about Pakistan ??