Pakistan’s reserves left only for 45 days import requirement

ISLAMABAD: Pakistan’s fast depleting foreign exchange reserves are left only for two and a half months import requirement, which is why, the economic managers of the country are seriously considering floating bonds amounting to $800 million in the international markets, a senior government official told The News.

When the new government took the charge, there was a proposal to float various bonds worth $2 billion including floating of GDRs (Global Depository Receipts) of some banks in the international market keeping in view the transparent, free and fair elections. But the government missed the bus as during that certain period of time the credit rating of Pakistan in the international market was quit reasonable.

According Finance Ministry sources, the government would soon float Workers Remittances Securitisation Bond worth $800 million to provide cushion to worsening foreign reverses situation. “The government, however, with the improvement of credit rating of the country would also come up with new proposal for floating more bonds in the international market,” said the sources in Finance Ministry

“Pakistan reserves at present stand at $10.487 billion out of which Commercial Banks have $3 billion meaning by that State Bank of Pakistan has only $7 billion with forward liability of $1.2 billion. Foreign reserves are depleting by $250 million to $300 million a week,” the official said.

“The dismal foreign reserves situation has prompted the government to tow the line of previous regime of floating bonds in the international market to arrange financial support to maintain foreign reserves at reasonable level.

“We are also going to introduce some duties on import of non-essential items to curtail import bill. The official said that some officials of Moody’s -an international credit rating agency are currently visiting Pakistan. They are meeting with Pakistan’s new economic managers and giving some tips to ameliorate the economy.

The new government took some bold steps of passing on massive increases in oil prices in the wake of hike in international market to end consumers and shown its resolve to reduce subsidy on POL products by December this year. The government also took bold steps to reduce OMCs margin and dealers’ commission and deemed duty on petroleum products in a bid to provide reduce the budgetary deficit.

The official said that government is still extending Rs21 per litre subsidy on High Speed Diesel, which the government wants to erase completely.

The government is very much on way to taking economic corrective measures and has decided to expedite and finalize the sell-off process of some government entities in next two months that include Global Depository Receipts (GDR) of Kot Addu Power Company (KAPCO), privatisation of SME Bank, sale of 90% shares of Hazara Phosphate Fertilizers Limited (HPFL) and Heavy Electrical Complex (HEC).

Source: The News, 8/8/2008

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