$143m repayment to IMF tomorrow

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THE NATION, ISLAMABAD, 26th SEPTEMBER 2013:- The cash starved government will repay around $143 million to the International Monetary Fund (IMF) tomorrow (Friday) that would put additional pressure on rupee and country’s foreign exchange reserves.
Sources in Finance Ministry informed The Nation that Pakistan would repay the 20th installment worth of around $143 million of the Stand-By Arrangement (SBA) to the IMF on Friday. Sources were of the view that this installment would put pressure on the Pakistan rupee, which is already losing its value against the US dollar. US dollar on Wednesday crossed Rs 109 level in open market. Similarly, the country’s foreign exchange reserves would come under pressure after this installment. Pakistan’s foreign exchange reserves have just gone beyond $10 billion level after receiving first installment worth of $540 million from IMF under Extended Fund Facility worth $6.6 billion.
Pakistan would have to repay three billion dollars to the Fund during the current financial year 2013-2014, which forced the Pakistan Muslim League Nawaz (PML-N) government to enter into IMF programme for loan repayment. Government is expecting to receive $ 2.2 billion from IMF during the ongoing fiscal year.
The independent economists believed that Pakistani rupee and reserves would remain under pressure due to heavy loan repayment to IMF. However, Finance Ministry has finalized loan proposals of $625 million from private commercial banks to build the foreign exchange reserves. However, rupee and reserves would remain under pressure till foreign inflows do not come in the country.
It is worth mentioning here that Pakistan is repaying to IMF loan, which was obtained in 2008 that reduced the foreign exchange reserves. Pakistan took $7.6 billion loan in 2008 under the SBA, which was later increased to $11.3 billion, but the country was not eligible for the last two disbursements of $3.2 billion due to its failure to comply with the performance criteria. The government failed to bring reforms to the taxation system and the power sector, which became the reason behind of the suspension of the programme.

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