Finance Minister Abdul Hafeez Shaikh is scheduled to leave for Washington DC on September 21 on a six-day visit to meet officials of the International Monetary Fund (IMF) and the World Bank (WB).
A senior official of the finance ministry told The Express Tribune on Thursday that Finance Secretary Dr Waqar Masood, Economic Affairs Division Secretary Abdul Wajid Rana, Federal Board of Revenue (FBR) Chairman Salman Siddique and State Bank of Pakistan (SBP) Acting Governor Yaseen Anwar will accompany the finance minister.
He said that the IMF had agreed to extend new loans to Pakistan if it submitted a consultation report under Article IV, as a part of the obligations regarding exchange arrangements.
(Read: IMF programme - ‘We tried, we failed, we give up’)
He added that the consultation report on Pakistan’s economic performance was prepared in collaboration with IMF officials once every two years, to be presented before the IMF board.
However, the official said, the consultation report had been delayed this year.
He said that talks with the IMF were postponed earlier to prepare the consultation report in view of the economic review, which was expected in July, under the first Standby Arrangement Programme (SBA).
However, there has been little progress on the SBA so far.
The IMF has now indicated that it will consider extending new loans to Pakistan if it submits the consultation report under Article IV.
Talking to The Express Tribune, sources in the finance ministry said that Pakistan would have to pay up to $2.3 billion in February 2012 to meet its debt obligations towards the IMF and the Paris Club.
They said that the grace period of the $11 billion IMF loan is due to expire in February. Therefore, Pakistan will have to pay the IMF $1.3 billion as the first instalment, they said.
They added that Pakistan would start paying back the $12 billion worth of loans that it had got rescheduled from the Paris Club during the Musharraf government. The first payment to the Paris Club will be around $1 billion, they said.
Officials in the finance ministry believe that the loan payments will severely affect foreign exchange reserves of Pakistan.
“Pakistan’s import bill will increase drastically if oil prices in the international market continue to rise. It will have devastating effects on our foreign exchange reserves,” one official said.
He said that the government was devising a strategy to maintain foreign exchange reserves. “Exchangeable bonds and dollar bonds will be issued in the international market to attract overseas Pakistanis in particular,” he said.
He added that new schemes would be launched to help overseas Pakistanis send back remittances. The government will also take steps to curb informal channels for transfer of money from foreign countries, he said.
He said that the new loan programme, if approved by the IMF, would be the Poverty Reduction and Growth Facility Programme (PRGF). It added that the PRGF would be long-term, but costlier than the short-term SBA.
Published in The Express Tribune, September 9th, 2011.
COMMENTS (2)
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This report is full of mistakes!
The "consultation" report is prepared once each year under Article IV of the Articles of Agreement and not every two years.
I am not aware of the IMF having agreed to anything as far as we are concerned. Pakistan has to have/present a viable program. We don't have one. You don't tell a country if you agree to an Article IV we will give you money. That is absurd. The Aticle IV is OUR obligation as members.
The Minister and his team will of course meet with IMF officials and suck up to the American's but the main purpose of the visit is the Annual Meetings of the IMF and the World Bank. Lots of gup-shup and fine dining -- not forgetting the fine shopping.
Pakistan is NOT eligible anymore for the highly concessional PRGF. Our per capita income is too high! The PRGF is NOT more expensive than the SBA. The writer has it backwards.
This business of floating convertible bonds and tightening up on the "hundi" are stop-gap measures. They are fine but they need to be put in a framework of a solid set of macroeconomic and structural policies that are charted out over the next three years. In other words: A REAL PROGRAM!
How much more shameless can this government get?
Going again to the IMF whithout implementing ANY economic reforms!