According to newspaper reports, Pakistan may not be eligible to get the World Bank loans in near future due to its inability to resist the speedy fall of foreign exchange reserves.The bank has reportedly declined a government request for a policy loan to adjust the exchange rates. However, a spokesman of the Finance Division has out rightly rejected the notion as incorrect, saying Pakistan has not filed any specific request for a policy-based programme. In his view the reports reflect a ‘sheer lack of information’ and the level of financial understanding between Islamabad and the World Bank. Currently, Pakistan and the World Bank are working on various projects and programmes, including policy-based lending support within the framework of Country Partnership Strategy 2015-19 devised by the bank. Other reports suggest Pakistan will not be able to get financial assistance from the International Bank for Reconstruction and Development due to fast depleting foreign currency reserves. In principle, a country seeking IBRD loan should have foreign exchange reserves equivalent to three months of the import bill whereas Pakistan is at the bottom line of its reserves. The reserves also include $3.9 billion in short-term borrowings by the State Bank and it is feared the reserves will further fall to minimum levels.
This is the financial position of a country of 200 million and the current and former prime minister are not tired of claiming financial stability as hallmark of their political domination. According to experts, two months – August and September — are very critical for the country as the forex reserves are slipping below the threshold. The experts put the actual foreign currency reserves at $4.2 billion, which are peanuts for a big country like Pakistan and unfortunate part of a rising economy. The Finance Ministry puts the reserves at $14.398 billion which it deems adequate for three month imports, but the forex could even fall to $10.4 billion if short-term forward contracts are excluded.
The financial position shows not all is well with the economy amid political turmoil. Terrorism on east and west borders of the country is bad for the regional stability also. The volume of remittances sent by expatriate Pakistanis is also shrinking and mismanagement is at its peak. The government has yet to fix who the incharge of the economy is. It appears the country has been left on the mercy of God.
