Pakistan’s foreign exchange reserves would further deplete in next month, as Islamabad would repay $520 million to the International Monetary Fund (IMF) under the standby arrangement programme (SBA) in February 2013, it was learnt on Monday.Pakistan has repaid $2.52 billion to the IMF in seventh installments since February 2012 under SBA. Sources said that Islamabad would repay the eighth installment worth $520 million to the IMF in February 2013 that would further reduce the country’s foreign exchange reserves, which are already under severe pressure. Sources said that Pakistan would repay $140 million on February 14 and $380 million on February 26, making total repayment of $520 million in a month.

Country’s foreign exchange reserves would come under pressure after repaying $520 million to IMF. Foreign exchange reserves of the country dropped to $13.705 billion in the week ending January 18 from $13.782 billion in the previous week, the central bank data revealed. Reserves held by the State Bank of Pakistan (SBP) fell to $8.809 billion from $8.951 billion a week earlier, while those held by commercial banks climbed to $4.896 billion from $4.831 billion.
However, sources believed that country’s foreign exchange reserves would further deplete in the remaining months of the ongoing financial year 2012-2013, as Pakistan has to repay $ 1.7 billion before June 30 2013.

Despite receiving around $2 billion from United States under coalition support fund (CSF), country’s reserves are sharply depleting. While Pakistan is not expecting to receive any foreign inflow of worth $2.1 billion under various heads during the ongoing fiscal year that could build the reserves. The government has budgeted non-tax collection around $2.1 billion for the ongoing financial year 2012-2013. The government has projected to receive $850 million by auctioning 3G licenses, disbursement of $800 million by Etisalat for privatisation of PTCL and $500 million by introducing Eurobond in the budget 2012-2013. However, with half year gone, there are clear indications that non-tax revenue of $1.6 billion on account of Etisalat and auction of 3G spectrum and introduction of Eurobond would not materialise in the current fiscal year.

Government of Pakistan is repaying the loan, $7.6 billion, taken in 2008 under the standby arrangement programme (SBA), which was increased to $11.3 billion but the country was not eligible for the last two disbursements of $3.2 billion due to failure to comply with the performance criteria. The government failed to bring reforms in General Sales Tax (GST) and power sector, which became the reason in suspending the programme.
Source said that in the next financial year Islamabad would have to repay $3.4 billion to the IMF. Hence, Pakistan would have no option but to seek a fresh bailout package from the IMF to remove the possibility of default.