News
Wednesday, June 29, 2011
US lawmakers undecided on Pak CSF arrears
* Pakistan’s budget deficit likely to jump to Rs 960 billion in case of delay in release of $500 million arrears under CSF
By Sajid Chaudhry
ISLAMABAD: US lawmakers remain undecided on Obama administration’s request for the release of $500 million arrears under the Coalition Support Fund (CSF) to Pakistan before June 30, 2011, and resultantly Pakistan’s budget deficit is expected to jump to Rs 960 billion or 5.3 percent of the GDP for the outgoing fiscal year 2010-11, official sources informed Daily Times on Tuesday.
The Appropriation Committee, comprising US lawmakers, had to take decision on Obama administration’s request for the release of CSF arrears till June 27, 2011. However, no decision has been taken by the committee despite expiry of the deadline, and the matter has dragged on, the official added.
Pakistan has a total claim of $3.8 billion CSF arrears against the US and some $1.8 billion were matured for release to Pakistan from April-June in 2010-11. Pakistan was assured that it might get $300 million to $500 million CSF arrears before June 30, 2011.
Pakistan was expecting to bring down it’s budget deficit to 5.1 percent of the GDP in case the US released $500 million before June 30, 2011.
However, as things have been delayed from the US side, the budget deficit is likely to climb up to 5.3 percent of the GDP, much higher than an understanding reached with the IMF to reduce it to 5.1 percent for the outgoing fiscal year. Pakistan would be financing it’s budget deficit through Rs 760 billion domestic borrowing and Rs 200 billion external borrowing.
The federal government has also plans to bring Rs 156 billion SBP borrowing to zero by June 30, 2011 to meet one of the performance benchmarks of IMF.
To a question about the possibility of curtailment of US aid to Pakistan by the US Congress, the official informed that nothing had been officially conveyed to Pakistan. The official hoped that International Monetary Fund (IMF) would endorse Pakistan’s Macro Economic Framework at a meeting in July, and that stalled $11.3 billion IMF Stand-By-Arrangement (SBA) would be restored as Pakistan had implemented RGST and power sector reforms.
The restoration of SBA would help gain $1.6 billion sixth tranche and procure issuance of Letter of Comfort by IMF for approval and release of finances from other donor agencies like World Bank and Asian Development Bank, official sources added.
The sources further informed that Pakistan had delayed the floating of $500 million Oil and Gas Development Company Limited (OGDCL) exchangeable bonds in the international financial markets due to unfavourable circumstances.
State Bank of Pakistan (SBP) has formed a committee to settle modalities for setting up a proposed Infrastructure Bank in Pakistan in order to meet long-term financing needs of the country.
Courtesy www.dailytimes.com.pk