Dar expects reserves to rise by $3 billion
(Express Tribune (Pakistan) Via Acquire Media NewsEdge) The government on Tuesday tried to soothe top bankers and assured them that the thin foreign currency reserves of the country will increase by about $3 billion.
It again pinned its hopes on uncertain inflows including $800 million from the United States despite Washington’s fresh warning to halt disbursements in response to blockade of Nato supplies in Pakistan.
“The government has redoubled efforts to increase foreign exchange reserves,” said Finance Minister Ishaq Dar to the heads of top commercial banks of the country during a meeting held to seek their cooperation in stemming the rupee slide against the US dollar.
Dar said the government was expecting payment of $800 million by Etisalat, another $800 million on account of Coalition Support Fund by the US and over $1.2 billion from the auction of telecom spectrum licence.
The only fresh injection that the minister cited was a $137 million short-term but expensive loan from the Islamic Development Bank, which is expected to be released today (Wednesday).
What the minister probably did not tell the executives was that the US gave a warning on Monday that it would stop CSF disbursements, if obstacles to Nato supplies were not removed.
Etisalat may not release the entire sum of $800 million because of dispute over certain PTCL properties, if it really decides to pay the outstanding amount to Pakistan for a 26% stake in the telecom company.
Also, there is still a long way to go before the government completes the auction of telecom spectrum.
By the end of November, the country’s official reserves had plunged to $3.05 billion, sufficient for only three weeks of imports. Owing to the shortage of dollars and administrative weakness of the State Bank of Pakistan, commercial banks had also refused to provide dollars to the exchange companies, forcing the Ministry of Finance to remind the SBP to do its job.
However, the finance minister said he was confident that inflows would further improve and currency speculators would eventually be the losers.
Dar asked the top bankers to cooperate with the government in stabilising the foreign exchange market, pointing out that with the cooperation of commercial banks, the rupee closed at Rs107.78 to a dollar in the inter-bank market.
“We have a clear road map to build foreign exchange reserves up to $20 billion in the next three years,” he said.
The bankers pledged their support to the government in efforts to stabilise the economy, according to a finance ministry handout.
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