Loan repayments may force Pakistan to go to IMF
ISLAMABAD: With a huge repayment of over $5 billion approaching in the next six months, Pakistan may be compelled to take a bailout package from the International Monetary Fund (IMF).
According to sources, repayment of over $700 million would be made to multilaterals from January-June 2019, which includes over $500 million principal amount and around $200 million interest payment. Bilateral repayments are projected at over $1.2 billion – over $1 billion principal amount and around $200 million interest payment, they added.
Pakistan would be required to make over $2 billion worth repayments to the commercial banks, including $1.9 billion principal amount and around $150 million interest payment. Moreover, the government would have to pay over $1.2 billion on account of bonds with $1 billion as principal amount and $251 million interest payment.
Sources said that Pakistan had paid approximately $3.6 billion in the first six months of the current fiscal year, including $1.7 billion multilateral repayments, $740 to million bilateral, $870 commercial banks and $260 million on account of bonds.
Overall, Pakistan is bound to repay around $9 billion in the ongoing fiscal year 2018-19. The incumbent regime has been striving hard to fetch more loans from friendly countries as well as from the IMF.
Pakistan has so far been able to receive $3 billion from Saudi Arabia and $1 billon from the United Arab Emirates (UAE). Sources said that the remaining $2 billion from UAE would be deposited in the central bank in the coming days, which would help increase the country’s reserves.
In addition, sources said, China is also giving 15 billion yuan ($2.2 billion) to Pakistan in a bid to boost the country’s reserves.
The incumbent team has been in continuous touch with the IMF team since November last year but both the parties failed to reach a common ground.
It is pertinent to mention that Pakistan’s foreign reserves rose to $8.1 billion through the assistance of Saudi Arabia.
According to independent economists, the incumbent government should immediately take assistance from IMF, as it would improve Pakistan’s financial position in the eyes of international lending organizations.
Leading economist Dr Salman Shah noted that the government is borrowing more money to repay the existing loans.
“This is worrisome,” he said. “We do not have any other option but to go to IMF, as the current account deficit is around $18 billion and approximately a repayment of $10 billion is also scheduled in this fiscal year.”
He advised the government to strike the deal with IMF as it would certainly lessen the existing burden on the government.
The scribe approached the finance ministry spokesperson for comments in this regard but he remained unavailable till filing of story.