ISLAMABAD - The International Monetary Fund (IMF) has approved the second tranche of loan worth $540 million under extended fund facility (EFF) for Pakistan, which would help in building the depleting foreign exchange reserves of the country that declined to less than three billion dollars last week.
The IMF’s executive board meeting gave approval for second tranche of loan worth $540 million in Washington for Pakistan after reviewing the economic performance of the first quarter (July-September) of the current fiscal year 2013-2014. Pakistan was in dire need of this second tranche as its reserves were sharply depleting owing to the repayment to IMF. Pakistan’s total foreign exchange reserves stand at $8.53 billion, wherein State Bank of Pakistan’s held reserves are only $3.47 billion, enough to cover only one month imports.
“The State Bank of Pakistan will receive the second tranche of loan worth $540 million by coming Monday,” said a finance ministry official while talking to The Nation. He further said that IMF had expressed satisfaction over the economic performance of the country, which was going in right direction. IMF had approved a three-year arrangement under Extended Fund Facility for Pakistan worth $6.64 billion on September 4, 2013. Pakistan had already received $540 million as first installment from International Monetary Fund. It is worth mentioning here that Pakistan’s foreign exchange reserves had been on the decline since July 2011 when reserves stood at $14.8 billion.
Pakistan had lost $12.0 billion reserves (held by SBP) in just 29 months by end-November 2013. The main reasons behind declining foreign exchange reserves of the country are decline in foreign inflows and rising debt repayments in last two and half years. Pakistan had lost $2.2 billion reserves in just four months (since July 2013) and $1.7 billion since signing the IMF programme. Now Pakistan will have to repay $300 million in ongoing month.