Pakistan may seek IMF help to boost forex reserves: official

ZAHEER ABBASI

ISLAMABAD: The government may be compelled to seek another IMF programme to support external account and supplement foreign exchange reserves during the current fiscal year if projected $2 billion foreign assistance does not materialise.

In reply to a question by Business Recorder, IMF’s Mission Chief for Pakistan Jeffery Frank stated that Pakistan faced a number of economic challenges, including those of reducing fiscal deficit, boosting long-term growth prospects and addressing long-standing problems in the energy sector. However, since there had been no request for a programme by Pakistan, it would be premature to speculate on the content of new arrangement, he added.

A senior official of the Finance Ministry on condition of anonymity said that foreign exchange reserves could decline below $10 billion if projected external inflows for the current fiscal year were not realised. He added that $2 billion projected for the current fiscal year include $400 million under the Coalition Support Fund (CSF), $800 million from sale of 3G licenses and another $800 million pending from Etislaat for privatisation of Pakistan Telecommunication Company Limited (PTCL).

The official expressed skepticism about payment by Etislaat and sale of 3-G licenses in the current fiscal year.

Complications in the payment of $800 million on account of PTCL could not be sorted out during the last two years despite numerous meetings with the management of Etislaat and a resolution of the problem could, therefore, not be predicted with any certainty, he said.

About the sale of 3-G licenses, the official said that the process was at an initial stage and might not be completed in the current fiscal year.

The government, he added, had been making budgetary projections of these two transactions for the past two fiscal years but had not succeeded and with elections looming near these two revenue streams “may not be realised” till after the elections.

Finance Minister Dr Abdul Hafeez Sheikh and other senior officials of the Finance Ministry have repeatedly rejected the possibility of going for a new IMF programme in the current fiscal year.

Analysts say that going to the IMF program at this stage is not feasible for the government because it would almost certainly entail stringent pre-loan conditions which would be politically unfeasible.

Top Finance Ministry officials were, however, optimistic that foreign exchange reserves would remain at a “comfortable level” and a caretaker set up “may not feel the need for a new IMF programme” and a decision would be deferred till the next government assumed power subsequent to elections.

Senior Finance Ministry officials contended that $2 billion external inflows, if realised, would give a comfort level to the economic managers with $13 billion foreign exchange reserves by the end of the current fiscal year.

“If the projected $2 billion external inflows are not realized, foreign exchange reserves may fall below $10 billion, especially if remittance inflows are below projections.”