26th instalment of $109m paid to IMF under SBA

* SBP spokesman says Pakistan has up till now repaid IMF $6,361 million since July 2011
26th instalment of $109m paid to IMF under SBA

KARACHI: Pakistan on Monday paid 26th instalment to the International Monetary Fund (IMF) under the Stand-by Arrangement (SBA) facility amounting to $109 million, said a spokesman of State Bank of Pakistan (SBP) on Monday.
In the last three days, the SBP had paid $256 million to IMF under the SBA facility. On last Friday, SBP paid 25th instalment amounting to special drawing rights (SDRs) 96 million, which is equivalent to $147million.
The SBP spokesman said with repayment of the 26th instalment, Pakistan to date has repaid IMF SDRs 4,170 million, which is equivalent to $6,361 million since July 2011, of which SDRs 3,619 million equivalent to $5,513 million was under SBA facility.
The spokesman said during the current fiscal year, Pakistan has repaid IMF SDRs 1,327 million equivalent to $2,027 million, which include SDR 1,234 million equivalent to $1,886 million under SBA and SDRs 37 million equivalent to $57 million. 
After the current repayment, remaining amount due under IMF’s SBA until September 2015 is SDRs 1,317 million, SBP spokesperson said. 
For the first time in Pakistan’s history, and continuous payments of the IMF the foreign exchange reserves of commercial banks have gone up from the holdings of the SBP.
Approximately, the central bank had made payments of above $500 million from its reserves during last five days.
However, the panic created by Finance Minister Ishaq Dar through statements has weakened the dollar in the open market and being sold at lower rates as compared to the interbank market.
The market experts said the dollar is becoming stronger again in the interbank market owing to the IMF payments and its impact would be on open market soon. In the open market the dollar has traded slightly up at Rs 105.47 for buying and Rs 105.70 for selling.
The experts said IMF payments weakened the country’s reserves during last three years and the remaining reserves would wash out after getting fresh IMF loans.
The reserves of the SBP have been shrinking since April 2012, the reserves then were $12.04 billion. The reserves of the SBP never saw improvement since that date. Foreign inflows fell sharply, instead outflows in the shape of repatriation of dollars made the case worst for the country.
However, commercial banks showed a brighter picture and their dollar holdings started rising.
In the fiscal year 2013, oil import bill increased to approximately $14 billion, equal to total remittances received by the country the same year.
A banker said, “The central bank was providing dollars for the market demand and supporting the interbank rates.” According to him, the SBP sold above $1 billion in the market to bring the dollar rates down.
The banker said the banks may continue to pay import bills for another couple of months, however the SBP’s reserves are declining each week. 
The repayment to IMF is causing erosion of foreign exchange reserves which hit the exchange rate hard and the local currency is melting against the international currencies, including dollar.
According to the SBP, Pakistan’s foreign exchange reserves fell by $436 million to $8.09 billion during the week ended on December 20.
The reserves did not include inflow of $553 million received from the IMF on December 23. 
After the statement of finance minister, the dollar lost Rs 2.50 in the last 20 days. The dollar was available at Rs 105.50 in the inter-bank while the open market was slightly above this rate on Thursday.
The government exerted pressure to bring down dollar rates in both the inter-bank and open markets but the exchange companies were complaining that banks were not supplying dollars as per their demand and requirement.
On the directive of the SBP, the banks increased the dollar supply to the exchange companies and rates started falling to Rs 106 from Rs 110. The supply was also improved in the inter-bank market, which ultimately reduced the reserves of the private banks.
The bankers said that the central bank is using its influence not to pay dollar in the exchange companies.
Dealers said the SBP’s influence is now limited with the intervention of the finance minister.

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