KARACHI: Pakistan on Friday paid the first installment of the loan it received from the International Monetary Fund (IMF) under the Standby Arrangement signed in 2008.
“We have paid 258.4 million SDR (Special Drawing Rights) which is equal to $399 million at the current exchange rate to the IMF,” said Syed Wasimuddin, Chief Spokesman of the State Bank of Pakistan.
The payment was made as part of the principal amount it received under the standby agreement signed with the IMF in 2008 for $11.4 billion. However, the country received a total of $7.9 billion.
Two more installments of 258.4 million SDR and 71.1 million SDR will be paid in May and June this year, respectively.
The country will also pay another 51.7 million SDR as part of the loan under Extended Credit Facility (ECF) from IMF. The country will pay 8.6 million SDR in March, 8.6 million SDR in April, 17.2 million SDR in May, another 8.6 million SDR in May and 8.6 million SDR in June.
“Pakistan will pay a total 639.6 million SDR to IMF under the Standby Agreement and ECF till June,” said the spokesman.
The interest on these loans had been paid but it was the first installment of principal that was paid on Friday.
The government is willing to acquire another loan from IMF and had several negotiations with the IMF but the lending agency did not find satisfactory response on part of economic reforms it suggested to the government particularly for the lowering of fiscal deficit and improving tax to GDP ratio.
Instead of decline the fiscal deficit has been rising and might be ended at 7 per cent of GDP at the end of the current fiscal year.
Pakistan made a point that defence spending was much higher due to war against terrorism, which is also a war of US interest.
Pakistan demands Coalition Support Fund (CSF) from US which was stopped after several incidents that soured the Pak-US relations.
Analysts have been showing serious concerns regarding the huge repayment (could be around $900 million) to IMF at end June.
However, the first payment of this installment did not impact the currency market despite knowing that the country’s foreign exchange reserves fell by $399 million with this payment.
“No impact, the day was as usual. Pak rupee has been sliding slowly against the US dollar for more than a month,” said Atif Ahmed, a currency dealer in the inter-bank market.
He said the US dollar was traded at Rs90.86-90 which was 4 to 6 paisa higher than previous day.
Fears about erosion of foreign exchange reserves of the country was visible in the currency market with the hope that Pak-US relation would improve before June, Nato supply will be restored and country might get CSF money during the same period.
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