Foreign reserves likely to soar to $14.9bn

ISLAMABAD: Pakistan’s foreign exchange reserves are expected to shoot up to $14.92 billion by the end of December with the disbursement of $1.2 billion by the International Monetary Fund (IMF).
 
Sources in the ministry of finance told Dawn that the disbursement of the fourth tranche of SDR 766.7 million, equivalent to about $1.2 billion will be credited to the State Bank through the Federal Reserve Bank either on Dec 28 or 29.


As of Dec 10, the foreign exchange reserves stood at $13.52 billion as reported by the ministry to the Economic Coordination Committee (ECC) of the cabinet. However, the following week the position of reserves improved to $13.72 billion, according to the State Bank.

The officials of the ministry of finance are now quite relieved following the approval of the fourth tranche by the IMF Executive Board under the Stand-by Arrangement (SBA), but with the start of remaining half of the current fiscal year in January, the government, particularly the ministry of finance would have to gear up efforts to prepare for the fourth review of country’s economic performance due in late February 2010.The 23-month SBA in an amount equivalent to SDR 5.17 billion or about $8.11 billion was approved in Nov, 2008. The third review of SBA brought total disbursements under the programme to an amount equivalent to SDR 4.17 billion or about $6.54 billion.

In addition to disbursing the fourth tranche, the IMF board approved Pakistan’s request for a waiver of the non-observance of the end-Sept performance criterion on the ceiling of the overall budget deficit, which was missed by a margin of 0.3 per cent of GDP.

IMF recognised Pakistan’s difficulties and stated that the fiscal slippage in the first quarter of current fiscal year was due partly to factors beyond the government’s control.

However, adhering to the fiscal target, while challenging given security-related spending pressure, will help build confidence, preserve macroeconomic stability, and limit the potential for crowding out the private sector, the Fund emphasised.