Pakistan will receive 874 million dollars under Kerry-Lugar Bill in the current fiscal year, ie before June 30, said Finance Minister Shaukat Tarin while talking to Business Recorder on Saturday. Tarin said that 1.5 billion-dollar civil assistance for Pakistan would also include 500 million dollars the US had pledged in Friends of Democratic Pakistan Conference (FoDP) in Tokyo.
"Under Kerry-Lugar bill, one billion dollar will be additional to 500 million dollars, pledged by the US in Tokyo conference," he said, adding that Pakistan required identifying the projects for the release of 874 million dollars before June 30, he said.
According to Deputy Chairman of Planning Commission Sardar Assef Ahmed Ali, Pakistan will receive 30 billion dollars - 15 billion dollars each for civil and military assistance - in the next 10 years by accepting Kerry Lugar Bill, which was recently signed by US President Barack Obama. Meanwhile, economists maintain that Pakistan economy needs significant foreign injections and the decision not to accept assistance under the Kerry Lugar bill may put the economy in serious trouble.
The government had already approved ambitious Public Sector Development Programme (PSDP) of Rs 646 billion for the current financial year, requiring six billion dollars from abroad to finance it. As many as 19 Federal ministriesdivisions have approached the Planning Commission to protest against the inability of the Finance Ministry to release amounts, committed in the 2009-10 Federal budget during the first quarter (July-September).
The Planning Commission has convened a three-day PSDP review meeting from October 19 to address the grievances of the ministries, said the sources. The Finance Ministry has repeatedly stated that it faces cash flow problems due to poor external cash inflow from donor countries and the international financial institutions (IFIs). According to the budget documents, around 6.3 billion dollars was expected from the FoDP and international financial institutions.
Pakistan's request to the International Monetary Fund for Augmentation of Access under the Stand-By Arrangement of 3.2 billion dollars, resulting in debt increase to the Fund from 7.6 billion dollars to 11.3 billion dollars, was premised on the return of this amount to the IMF as and when the FoDP funds materialised. Kerry Lugar Bill will generate one billion dollars for possible return to the IMF unless the government renegotiates with the IMF.
The World Bank is expected to provide 846.888 million-dollar loan this year - 43.272 million-dollar assistance from IBRD and 803.371 million dollars under IDA loan facility. The IDB loan disbursement to Pakistan has been projected at 718.545 million dollars with a short-term loan facility of 500 million dollars to support Pakistan to purchase oil from different countries.
The ADB loan disbursement is projected at 1.7 billion dollars. It will be difficult for the country to repay the massive external debt with the current projected GDP growth of three percent by the IMF, the slowest in 10 years. Under an agreement with the IMF, the central bank is gradually shifting the responsibility of oil import bill payment to private sector. The country meets 80 percent of its fuel requirements through oil imports.
Private sector will require about five billion dollars to place orders for the import of oil and local commercial banks are unlikely to be able to meet this demand for foreign exchange. Pakistan received foreign loans, amounting to 8.8 billion dollars from the international donors and countries, including the International Monetary Fund (IMF), during 2008-09.
Among the donors and financial institutions, the IMF was the lead lender during the last financial year and provided 3.948 billion dollars under the 7.6 billion-dollar stand-by arrangement approved in November of 2008. Pakistan received a total of 4861.1 million dollars from bilateral and International Financial Institutions (IFIs).
Asian Development Bank (ADB) lent Pakistan 1.5 billion dollars; World Bank 1.17 billion-dollar loan with components of 70.711 million dollars from IBRD and 1100.748 million-dollar IDA loan facility. Islamic Development Bank (IDB) provided 656 million-dollar short-term loan for oil purchase out of the total disbursement of 678.74 million dollars.