The present government would have to seek a waiver from the International Monetary Fund (IMF) - under the $6.4 billion Extended Fund Facility - for its failure to meet the target of borrowings from the State Bank of Pakistan. Official documents available with Business Recorder reveal that the total debt stock of the SBP was Rs 2,168 billion at the end of June 2013. It increased to Rs 2,521 billion by the end of September 2013 and reached Rs 2,611 billion by the end of December 2013.
Sources revealed that the total stock of government borrowing from the SBP was increased to Rs 2, 611 against the agreed target of Rs 2,560 billion under the second review of the IMF programme that was completed in December 2013. The IMF performance benchmark on ceiling on net SBP credit to the government (including provincial governments) remained unmet, according to an official who on condition of anonymity said the release of the third tranche may be contingent to the approval of a waiver from the IMF Board.
The stock has continued to rise even though the flow of borrowing from SBP declined in February due to a $1.5 billion inflow from Saudi Arabia that as per the Finance Minister has been parked in the Pakistan Development Fund.
Ceiling on SBP's stock of net foreign currency swap/forward position under the programme was targeted at Rs 2,255 billion for end December 2013, which was estimated to cross Rs 2, 650 billion for the period. Source added that as the quantitative targets of borrowing as well as ceiling on net foreign currency swap were not adjusted, the authorities were unable to limit the borrowing from central bank as well as ceiling on SBP's stock of net foreign currency swap/forward position and would be required a waiver from the IMF to qualify for the tranche.
An official revealed that the Finance Ministry has been violating State Bank of Pakistan (SBP) law by failing to bring borrowing from the regulator to zero at the end of every quarter. An official on condition of anonymity also acknowledged that Finance Minister Ishaq Dar-led Finance Ministry has violated the SBP Act as neither the borrowing was retired nor any statement was presented before the Parliament, giving a detailed justification for the failure.
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