ISLAMABAD – Pakistan’s foreign exchange reserves are likely to touch $18 billion benchmark by the end of current month, as Islamabad expects to receive another tranche worth of $500 million from International Monetary Fund in last week of June.
The executive board of the IMF would meet on June 26 to consider its mission report on Pakistan’s 7th review under the extended fund facility.
The Board is likely to approve the next tranche of $506 million to Pakistan.
An IMF staff mission, led by Harald Finger, visited Dubai and Islamabad from May 1-11, 2015 to conduct discussions on the seventh review under the SDR 4.
393 billion (about $6.
6 billion) Extended Fund Facility (EFF) arrangement with Pakistan, approved by the IMF’s Executive Board on September 4, 2013.
The IMF mission and Pakistani authorities have reached staff-level agreement on a Memorandum of Economic and Financial Policies on the seventh review under the EFF arrangement, which, upon management approval, will be considered by the IMF Executive Board in this month (June).
After completion of this review, SDR 360 million (about $506 million) will be made available to Pakistan.
Pakistan had already received $3.
5 billion from the Fund in six tranches since September 4, 2013.
The inflow of 7th tranche would further build-up the reserves of the country and might touch $18 billion benchmark.
According to the State Bank of Pakistan, the country’s overall foreign exchange reserves are $17.
44 billion wherein central bank reserves are $12.
31 billion and commercial bank $5.
Finance Minister Ishaq Dar had once claimed that Pakistan would have the highest ever foreign exchange reserves of the country of more than $18.
29 billion by June 30, 2015.
Pakistan is likely to have the highest level of foreign exchange reserves mainly held by the State Bank of Pakistan (SBP) if reserves surge to $18.
Previously, the country’s forex reserves had touched $18.
29 billion mark in July 2011 mainly with the help of IMF’s borrowed front loaded money of $8 billion by the PPP government so the real reserves at that time were $10 billion.
Furthermore, government has estimated to increase the foreign exchange reserves to $19 billion by the end of the outgoing 2015 and to $20 billion by 2017-18.
MF staff mission Harald Finger in statement said that Pakistan’s economy continues to gradually improve, helped by macroeconomic stability, lower oil prices, robust remittances, and higher supply of gas and electricity.
Real GDP growth is expected to reach 4.
1 percent this fiscal year and accelerate to 4.
5 percent next year.
Average headline inflation dropped to 2.
1 percent in April, but is expected to increase in the coming months reflecting the stabilisation in international petroleum prices following their recent decline.
Key priorities for the second half of the programme include improving the energy sector; widening the tax net to create space for infrastructure investment and social assistance; improving the business climate; and further strengthening external reserve buffers.
Strong implementation of reforms in these areas, as envisaged in the programme, will transform Pakistan into a dynamic emerging market economy.