Pakistan should be able to meet its debt service obligations even if the $3.2 billion from the stalled Stand By Arrangement (SBA) of the International Monetary Fund (IMF) is not disbursed during the forthcoming fiscal year, well-placed sources told Business Recorder here on Thursday. Pakistan, as per the SBA agreement, would begin repaying from fiscal year 2011-12.
The payment for next year is estimated at $800 million. A 23-month SBA in an amount equivalent to SDR 5.1685 billion (about US $7.61 billion) was originally approved on November 24, 2008. On August 7, 2009 the SBA was augmented by 3.05 billion dollars to SDR 7.2359 billion (about US $10.66 billion) and extended through December 30, 2010.
Following the completion of the fourth review in May 2010, disbursements under the SBA reached SDR 4.936 billion. The fifth review remains stalled since May last year. In addition, on September 15, 2010, the IMF Board approved US $451 million disbursement under the Emergency Natural Disaster Assistance framework to help Pakistan manage the immediate effects of the floods.
Sources revealed to Business Recorder that the government has taken a cautious approach with respect to the possibility of the IMF releasing the penultimate SBA tranche in July 2011 subsequent to its scheduled meeting with the Pakistan economic team. However "the release of the tranche would depend on our ability to implement critical reforms including the implementation of the controversial RGST," sources said.
Sources further stated that "Pakistan has not sent any request to IMF so far for a fresh loan as it is focused on current SBA but Pakistan has the right to sustain or retire the existing programme". According to IMF terms and conditions it is up to the government of Pakistan to determine whether it will prefer a new loan programme and cancel the current one, or sustain the current SBA as it is.