US expected to release Pakistan's blocked funds
Islamabad (Dawn/ANN) - Pakistan is expected to receive US $2.5 billion during the current financial year from the United States under three different heads, particularly the Coalition Support Fund (CSF), following a thaw in tense relations between the two countries.
Informed sources said the disbursements might relieve the government of the pressure it was facing because of depleting foreign exchange reserves which necessitated an immediate bailout program from the International Monetary Fund.
The sources said the major disbursements were expected on account of CSF for services Pakistan had previously rendered for coalition forces in Afghanistan.
Under this head, the US is expected to pay $1.5-2 billion during the current fiscal year. About $700 million to $1 billion is expected under the Kerry-Lugar Berman Act and Foreign Military Financing (FMF).
An official said that about $1.3 billion worth of CSF bills had already completed the 10-stage approval and reconciliation process of the US government and just needed banking instructions for its transfer into Pakistan’s accounts.
Another $800 million to $1 billion worth of bills had also got through the reconciliation process and were awaiting approval process because of political issues surrounding the closure of supply routes.
“We are expecting disbursements to start within the current month," an official told Dawn but declined to quantify the first instalment.
Pakistan had originally estimated a payment of $1.3 billion from the US on account of CSF for the just concluded financial year (2011-12) that was later scaled down to $800 million but worsening of relations after the US attack on Salala border posts on November 26 last year and closure of the land route for Nato supplies resulted in stoppage of disbursements by the US.
He said the United States had a 10-stage approval process for CSF disbursement and $1.3 billion amount had passed nine stages more than six months ago when the process was stalled. Non-payment by the US was one of the major reasons for Pakistan to miss its fiscal deficit target for the last financial year by a wide margin. Against a budgeted target of four per cent of the GDP, the annual deficit widened to over 7.6 per cent of the GDP.
He said that along with last year’s held up amounts, the US was also expected to speed up in coming months the approval of more bills. The official explained that these amounts no more required parliamentary approvals and would just need to go through reconciliation procedures at the bureaucratic level.
Pakistan also estimates to get about 8.2 billion rupees ($85 million) from the United States on account of the Kerry-Lugar Aid programme.
Until May 2011, Pakistan’s defence authorities had billed about $12 billion to the US under the CSF. The US had disbursed most of the bills except $3.5 billion that were still outstanding. But this amount did not include services Pakistan provided to coalition forces in Afghanistan since May 2011 when defence authorities stopped sending bills as relations started worsening in the wake of unilateral US action in Abbottabad which left al-Qaeda chief Osama Bin Laden dead.
An official said that according to rough estimates the total outstanding amount on account of CSF would be in the vicinity of $4.7-5 billion including the previously billed amount of $3.5 billion. The monthly CSF bills averaged $100 million.