Pakistan receives $337 million under Coalition Support Fund

KARACHI: Pakistan has received the first tranche of $337 million from the United States under the Coalition Support Fund (CSF) for the current fiscal year of 2015/16, the central bank said on Tuesday.
The government is estimated to receive a total of $1.5 billion in FY16 under the CSF, said a spokesperson at the Stat Bank of Pakistan (SBP).
The country received a total of $1.5 billion as CFS inflows during the last fiscal year of 2014/15 against the revised estimate of $2 billion, while in FY14 the received amount was $1.1 billion in FY14.
Analysts said the current CSF inflows will further provide comfort to the fiscal and external accounts by bolstering the foreign exchange reserves in the days ahead.
The CSF is compensation by the United States for defence and logistics spending by Pakistan as part of the US war against terrorism. The country received nearly $13 billion in CSF reimbursements since 2001.
The country’s balance of payments position continued to improve in the second half of FY15. That was reflected in increase in the SBP’s foreign exchange reserves, rising to $13.5 billion as of June 30 from $10.5 billion at end-December 2014.
The International Monetary Fund (IMF) is also likely to release around $550 million under the Extended Fund Facility to Pakistan next month on the completion of the eighth review on the Pakistan’s economy.
The meetings between the IMF and Pakistan are starting from July 29 to August 6 in Dubai to review progress on the targets agreed for the April-June period and discuss the advancement on conditions set for July-September.
The country’s current account deficit narrowed to $2.28 billion during FY15 compared with $3.13 billion in the preceding year.
Many economists foresee the balance of payments position at comfortable level this year on stable outlook of commodity prices.
The current account deficit is projected at $2.8 billion or almost 1 percent of GDP during the current fiscal year.
Trade gap has widened to 10.68 percent in 2014/15 due to fall in exports and increase in imports. Exports fell by 4.8 percent to 25 billion, while imports rose by a slight 2.01 percent to $45 billion.
Workers’ remittances provided a major cushion in financing current account as these flows reached all-time high of $18.45 billion in FY15.
The foreign direct investment inflows, however, dropped to $709.3 million in July-June FY15, compared with $1.698 billion during the preceding year.