By Khalid Mustafa
ISLAMABAD: In a shocking situation, Pakistan is now left with foreign exchange reserves of only $4 billion, in real terms, enough to cater for the import of one month, a senior government official at the Ministry of Finance told The News.
The total forex reserves stand at $8.89 billion, out of which commercial banks have $3.38 billion, meaning that the State Bank of Pakistan possesses $5.5 billion. Out of this $5.5 billion, $1.5 billion have already been consumed because of the forward booking liabilities.
Keeping in view the fast depleting foreign reserves, the dollar-rupee parity stands at $1-Rs 77, which is alarming. Financial experts are of the view that dollar’s value can cross any time Rs 80 because of the worsening reserves situation and the prevailing political uncertainty.
Some financial experts are of the view that political chaos would continue even after September 6, the day a new president would be elected, as the judges’ issue would continue to linger on and Nawaz Sharif, along with the All Parties Democratic Movement, would jointly increase the political momentum on the issue that would aggravate the situation.
This has actually left the Pakistan’s economy in a lurch. Presently, there seems no light at the end of the tunnel, as the fate of oil facility amounting to $6 billion from Saudi Arabia is still in doldrums till the election of the new president.
As far as the government’s request to the World Bank seeking $1 billion loan, there is no progress. The bank has, in fact, refused to extend any programme loan. According to official sources, the bank has agreed to extend project loans only.
The World Bank’s top guns have conveyed to the authorities in Pakistan that the bank has linked its future programme loans to the issuance of the Letter of Credit by the International Monetary Fund (IMF).
The two installments each of $136 million from the UAE-based Etisalat Company against the privatisation of the PTCL are now overdue and the government is awaiting the delivery of $272 million. However, there is no progress on this issue.
The government, despite its tall claims, has so far failed to float the Workers Remittances Securitisation Bond worth $750 million to provide cushion to the worsening foreign reserves situation.
On the privatisation front, there seems no tangible progress on sell-off programmes. The government claims that some privatisation proceeds amounting to $1.86 billion are in the pipeline.
The government was earlier claiming that it would have inflows of $250 to $300 million as the Pakistan Telecommunication Authority (PTA) was going to issue some licenses of that value to various companies in the first quarter of the current fiscal. So far, no progress has been seen on this issue too.
The Abraaj, an Arab group that has become the new administration of the Karachi Electric Supply Company, still has not injected $400 million investment into the KESC. It means the forex reserves would continue to decline in the days to come.
Source: The News, 4th September, 2008