Finance adviser optimistic about IMF loan

Islamabad: Pakistan's Adviser on Finance Shaukat Tarin is confident that the country will be extended an International Monetary Fund (IMF) loan within the next 15 days.

Officials of his ministry put the under-consideration IMF financial two-year package at $7.5 billion (Dh27.5 billion) under Stand-By Arrangement (SBA) at an interest rate of 6-6.5 per cent. Tarin said that the government has worked out modalities for the loan, but has not informed the IMF about its requirements yet.

"[The] loan facility from the IMF is, however, not our last resort. Other options are also under consideration," Tarin told foregin media and parliament in separate interactions.

"We will be filing a formal application to the IMF within a few days," he said, as officials of his ministry hinted that the country will file the application on November 15.

The IMF is expected to extend Pakistan loan facility under the newly created Short Term Liquidity Facility. Emerging economies with a strong track record of implementing macro-economic policies but affected by the global financial crisis are eligible to qualify for loans under this scheme. The IMF Executive Board approved this lending facility in October this year.

Causes

"The ill-conceived policies of the previous government and global economic recession were the main factors which led to retard the pace of economy. Foreign exchange reserves have scaled down from $16.4 billion to $7 billion, he indicated" Tarin said, adding, "we are facing difficulties in global fiscal transactions due to the low credit rating of Pakistan. Forex reserves have hit the highest low mark."