Bending over backwards: Pakistan paves way for $7.3 bln IMF loan

Published: August 20, 2013
Email
Pakistan is going to make about $395 million payments to the IMF on August 26th as part of repayments of earlier borrowed amount.  PHOTO: FILE

Pakistan is going to make about $395 million payments to the IMF on August 26th as part of repayments of earlier borrowed amount. PHOTO: FILE

ISLAMABAD: The federal government has advised the State Bank of Pakistan to immediately purchase $100 million from the open market in a move to fulfill the last remaining condition set by International Monetary Fund to qualify for a $7.3 billion loan, according to sources in Ministry of Finance.

With the purchase of $100 million from open market for the buildup foreign currency reserves, the country will be all set to receive the $7.3 billion loan to be approved by the IMF Executive Board next month.

This condition was met on the last day of the deadline, which expired on Tuesday.

Earlier, Pakistan paved the way for the new loan after it met all other conditions set by the IMF.

Sources said that the IMF has asked Pakistan to mop up dollars from the market, as the country’s net foreign reserves excluding forward contract liabilities and IMF’s immediate liabilities, have slipped into negative.

The SBP’s intervention in the market is likely to bring the rupee under further pressure after having already been traded at the lowest level against the greenback.

The net reserves, held by the SBP, stood at $5.2 billion as of August 2. Out of that, the SBP owes $2.4 billion in forward contracts while the IMF’s immediate liabilities have been estimated at over $3 billion.

Earlier in the month, the IMF had approved Pakistan to make an approach for $6.3 billion loan. This follows from the loan it approved in early July.

Facebook Conversations

Reader Comments (8)

  • aslam
    Aug 20, 2013 - 11:18PM

    When you take it in the back you bend forwards. Not backward.

    Recommend

  • kamran
    Aug 20, 2013 - 11:42PM

    In your article (link below) you had said that imf is also pushing for interest rate hike. This had not materialized so how can you say above that last condition had been fulfilled.
    Regards
    Kamran

    http://tribune.com.pk/story/589886/contractionary-monetary-policy-govt-dragging-feet-as-imf-demands-interest-rate-hike/

    Recommend

  • gp65
    Aug 20, 2013 - 11:46PM

    Very poor headline. Complying with terms of a loan from a lender of last resort cannot be called ‘bending over backwards. Especially when the requirement that the country’s reserves not be negative is hardly unreasonable one for a lender to demand to ensure that Pakistan has the capacity to repay the new loan.

    Also in one place in the article you say $6.3 billion has been approved and in another place you say it is $7.3 billion. A week back ET itself had published a headline saying $6.6 billion had been approved. http://tribune.com.pk/story/589461/imf-agrees-to-allow-pakistan-to-seek-6-6bn-officials/

    Really shoddy editing. Please pull up your socks.Recommend

  • Shahbaz Rana
    Aug 21, 2013 - 1:01AM

    @kamran:
    The web version is brief one. In printed version you will find answer to your question. Interest hike coming up

    Recommend

  • Shahbaz Rana
    Aug 21, 2013 - 1:05AM

    @gp65:
    So far imf management has hinted at $6.6 b. it’s Pak demand of $7.3b. Explained in story that will be published today

    Recommend

  • vaqas
    Aug 21, 2013 - 1:05AM

    @gp65:
    It says the 100 million purchase was for meeting the requirement to recieve 7.3 billion.
    And it says the imf has approved that pakistan may approach it to request for another 6.3 billion loan, earlier this month.
    Nothing wrong in the english or the content of this article. The financial implications of it are entirely a different matter.

    Recommend

  • vaqas
    Aug 21, 2013 - 1:05AM

    @gp65:
    It says the 100 million purchase was for meeting the requirement to recieve 7.3 billion.
    And it says the imf has approved that pakistan may approach it to request for another 6.3 billion loan, earlier this month.
    Nothing wrong in the english or the content of this article. The financial implications of it are entirely a different matter.

    Recommend

  • OK
    Aug 21, 2013 - 2:25PM

    Does it take that much more effort to publish the whole article online? ET could possibly say that they only publish the full article in the print edition. But that would be misleading as many articles are documented in their entirety on the web. So why not this one?? I agree with GP65.

    Content on ET is substandard. As a reader of this paper, I can only hope that you improve as opposed to making excuses. Right now i treat ET as my entertainment newspaper (i.e. quasi tabloid)

    Recommend

More in Pakistan