Pakistan to repay $6 bn on foreign debt servicing in next six months

ISLAMABAD: Minister of State for Finance Rana Mohammad Afzal Khan said that Pakistan would have to repay $6 billion on account of foreign debt servicing over next six months and the strategy was being devised to ‘manage’ twin deficits as well as protecting foreign currency reserves.

“We are not going back to the IMF but we will have to manage repayment of $6 billion up to June 2018. We have devised strategy to go for borrowings as all other options are opened in front of us,” Rana Afzal said in his maiden talks with the media persons here at Q Block (Finance Ministry) on Thursday evening.

Pakistan’s foreign currency reserves stood at $20.18 billion including $14.13 billion held by the State Bank of Pakistan (SBP) and $6.05 billion by the commercial banks despite raising $2.5 billion from international bonds last month. During the week ending 22nd December, 2017 the SBP’s reserves decreased by $199 million to $14.133 billion, due to external debt and other official payments.

After taking oath as Minister of State for Finance couple of days back, Rana Afzal said that the government would partially pass on burden of increased oil prices in international market with domestic consumers for next month. He hoped that the oil prices would start witnessing decreasing trends after severe winter season in international market after which the prices were expected to come down.

To another query, he predicted that either the Senate elections would be held in coming March 2018 then the general elections would be held on time or the Senate elections would not be held then there would be no general elections going to be held in the country.

He said that the government would make efforts to resolve issue related to China Pakistan Economic Corridor (CPEC) asthe money paid outside Pakistan was shown as import transactions but it should be shown as foreign direct investment.

He disclosed that Prime Minister Shahid Khaqan Abbasi chaired tax reform plan under which the FBR would sent out ‘polite tax notices’ to 10,000 potential non-filers who were identified with data on the basis of their luxurious life style and spending. “There is potential of 4 million non-filers but we have decided launching of broadening of tax base campaign from identified 10,000 non-filers from January 1, 2018,” he added.

The number of return filers, he said, had gone up to 1.14 million till December 28, 2017 against 9,16000 in the same period of last year 2016. To another query regarding offering amnesty scheme for owners of offshore companies and assets abroad, he said that in the aftermath of signing OECD convention hiding of wealth and assets became difficult so the government was exploring its options to go ahead with any scheme through upcoming Finance Bill on eve of next budget. There are certain options available including tabling legislation bill, promulgating of ordinance or introducing through Finance Bill on eve of next budget, he said and added that the government could present its next budget in case of completion of its five year tenure.

When specifically asked about any consideration to go back to the IMF, he categorically said that they would not approach the IMF for fresh bailout package but all other options would be explored for getting dollar inflows on track to manage deficit and protecting foreign currency reserves.  

He said that the trade deficit would have to be reduced as exports were picking up and imports were coming down. He said that its impact analysis would be done after getting numbers of January 2018. He said that the cost of energy for exporters were less than India and Bangladesh and was bit higher compared to Vietnam. Without improving overall basket of electricity, its prices cannot be brought down because if prices were reduced then it could cause escalation in subsidy amount, he added.