Pakistan is scheduled to repay the third instalment worth $107 million of the Stand-By Arrangement (SBA) to International Monetary Fund (IMF) in the last week of this month. Sources in Ministry of Finance told Business Recorder on Monday that although the country was facing many economic challenges including rising current account deficit and decline in the foreign reserve, arrangements have been made to pay the installment on time.
Like previous two instalments, Pakistan will also repay the third instalment on time, they added. According to SBA agreement with IMF, the total three instalments of worth 587.9 Special Drawing Rights (SDR), which is equal to $908.4 million, were due on account of repayment of SBA during fiscal year 2011-2012. Out of these three, two instalments have successfully been paid in third and fourth quarter of FY12 and remaining one is due in the last week of current fiscal year.
The SDR is an international reserve asset, created by the IMF in 1969 to supplement the existing official reserves of member countries. Currently, US dollar is equivalent to about 1.6 SDR, however its changes continuously. As per accord, Pakistan had already paid SBA''s first instalment of 258.4 million SDRs ($399 million) to IMF on February 24, 2012. While, second instalment of SBA programme worth 258.4 million SDR (some $394 million) transferred into IMF account on May 25, 2012.
Now, Pakistan has to pay third instalment of over $100 million in the last week of June 2012. "Pakistan has all set to pay 71.066 SDR (about $107 million) to IMF on account of SBA repayment as on June 29, 2012," the sources said. After payment of third instalment, overall payments to IMF on account of SBA will surged to $900 million, as two repayments of $793 million have already been paid in February and May of this year and third worth $107 million will be paid in last week of June.
While at the end of this fiscal year, principle amount under SBA loan will also decline to $7.2 billion from $8.1 billion. In addition, with payment of third instalment, there is no repayment in the first quarter of next fiscal year 2012-2013 (FY13) and fourth repayment is scheduled in October 2012, in which the country will pay 71 SDR or $107 million to IMF.
Sources said that third instalment will be paid from the foreign currency reserves held by State Bank of Pakistan, while interest on the SBA is being paid by the central bank on quarterly basis. Presently, the country''s foreign reserves are depleting gradually, which fell to $15.41 billion level on June 8, 2012 as compared to $16 billion on May 25, 2012.
Major decline has witnessed in SBP''s reserves, which have decline to $11.11 billion from $11.69 billion. While reserve held by banks stood at $4.3 billion. It may be mentioned here that Pakistan re-joined IMF programme in November 2008 to avoid default as the country''s reserves dipped to $6 billion level in October 2008 followed by higher current account deficit. Out of totalled $11.3 billion programme, the country received about $8.1 billion and failed to get the remaining $3.2 billion due to suspension of IMF SBA due to delays in implementing fiscal reforms by the government.