Plans to raise another $500-$1 billion bond cancelled at last moment

DPC from WB, policy loans of ADB under threat in lieu of IMF report

ISLAMABAD: The government plans to raise another $500-S1 billion from Eurobond was cancelled at the last moment during a meeting of the federal cabinet, removing any possibility of going to international markets this year.

Development policy credit (DPC) from World Bank and program loans from Asian Development Bank (ADB) are under threat as IMF’s upcoming report loom and questions over Pakistan’s ability to keep forex reserves over 2.2 months of import bill continue.

Persisting slide in forex exchange reserves was increasing the risk on the external front and could stop the WB’s DPC and program loan in coming months, official sources said, reported The News.

The Washington-based lenders report is expected to be tabled before the Fund’s executive board by first week of March and will then be released for public vetting.

Ex-Secretary Finance Shahid Mahmood last time decline to conclude macroeconomic estimations especially on current account deficit front before the last past post program monitoring (PPM) and both sides agreed to improve understanding after finalizing data for end December 2017.

A summary to appoint Shahid Mahmood as Advisor to Finance Ministry for next three to four months had been rebuffed by Prime Minister Shahid Khaqan Abbasi. A new team constituted led by his successor Secretary Finance Arif Ahmed Khan overtook the reigns, but cluelessness about complex economic issues and government’s focus on the political front was restricting the capability to address economic challenges which were rising daily.

IMF’s report will be handed over to Governor State Bank of Pakistan and Advisor to PM on Finance, and if the report includes negative forecasts on net foreign currency reserves or current account deficit, could cause differences between the two sides.

IMF will need Pakistan’s approval before its report is forward to its Washington-based headquarters and handed over to members of Fund’s executive board

Consequently, Pakistan’s dependency on loans from foreign multilateral creditors has risen greatly.

As per an official, Pakistan would require to show foreign currency reserves of SBP would be able to meet import requirements of over two months for it to get qualified for IDA credit line.

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