ISLAMABAD: Pakistan’s struggling economy has secured another bailout package of $3 billion from Qatar in shape of deposits and investments, with the Gulf state’s total investment now standing at $9 billion.
With this new support from four friendly countries including China, Saudi Arabia, the UAE and Qatar, the total assistance touches $15.8 billion. Just ahead of approval $6 billion IMF package, Qatar Monday announced $3 billion as deposits and investments and both sides would work out its exact details in the coming days.
The IMF has already placed a condition that Islamabad will have to get rollover from friendly countries in order to manage pressing financing requirements on external front during the programme period.
“I want to thank the Emir of Qatar HRH Sheikh Tamim Bin Hamad Al Thani for announcing $3 billion in deposits and direct investments for Pakistan, and for Qatar’s affirmation to further develop relations between the twocountries. This support will strengthen the external sector & further build FX reserves,” Advisor to PM on Finance Dr Abdul Hafeez Shaikh said in a tweet on Monday.
The exact condition on the funding amount of $3 billion is not yet known. Saudi Arabia and the UAE used to charge 3 percent interest rate on deposits provided to Islamabad in the outgoing fiscal year. The Chinese are charging higher interest rate as they are linked with SHIBOR (Shanghai Interbank offered rate).
Pakistan had already obtained $4.6 billion as deposits and commercial loan from China, $3 billion as deposits from Saudi Arabia and another $3.2 billion as oil on deferred payment.
The UAE has also provided $2 billion deposits out of the total commitment of $3 billion. Now with $3 billion commitment from Qatar, total assistance from friendly countries might touch $15.8 billion.
Official sources said it was not yet ascertained what would be exact share in shape of deposits and investments out of total committed amount of $3 billion. The amount would definitely be made available in the next fiscal year 2019-20 starting from July 1, 2019.
Interestingly, Pakistan secured assistance from Qatar, the UAE as well as from Saudi Arabia as these Gulf States had strained relations.
There might be other reasons but one of the reasons for the UAE’s decision to withhold $1 billion deposit was Pakistan’s enhanced relations with Qatar after PM Imran Khan’s visit to Doha.
“Pakistan has obtained a breathing space from friendly countries before approval of the IMF bailout and it will help Islamabad to manage external financing over the next three years under the Fund program,” said the official.
During the visit of Qatari Amir, a Memorandum of Understanding (MoU) on establishment of Pakistan-Qatar working group (JWG) on trade and investment was signed between the Commerce Ministry of Pakistan and its counterpart, Ministry of Commerce and Industry of Qatar.
The MoU aims to devise a mechanism to improve trade and economic ties of both countries which are currently far below its potential. Through this MoU, now a special and dedicated Working Group will be established to expand the trade and investment cooperation, strengthen communication and enhance trust to boost economic growth by creating enabling environment.
The working group will identify the bottlenecks holding the growth of bilateral trade and investment ties and it is mandated to take measures to unlock the growth.
The Working Group on the Pakistan side will be headed by Secretary Commerce Ministry of Commerce & Textiles (Commerce Division), Pakistan with the representatives from other relevant Ministries/Departments including Board of Investment as its members.
From the Qatari side, Head of Ministry of Commerce and Industry will be leading the Working group. Previously, due to lack of an effective and mandated formal mechanism, it was comparatively difficult to address bilateral trade issues in an efficient and mutually fruitful manner.
The establishment of working group was required to take up and resolve bilateral issues on a dedicated and relevant forum.
Pakistan has witnessed a visible increase in its exports to Qatar in recent times. The significant increase in exports is attributed to the opening of Qatari food market, construction and FINTECH sectors as Qatar strives to be self-sufficient and seeks alternative sources of import of goods and services.
The trend is on the rise and Pakistani companies have sensed a lot of opportunities in the Qatari market. Pakistan has a distinct advantage of proximity to Qatar and can easily cater for tis food security needs. Consequently, Pakistan’s exports to Qatar are on the rise.
The Ministry of Commerce is especially working on capitalizing on the FIFA World Cup 2022, which offers a huge export opportunity for the Pakistani football manufacturers and exporters. Moreover, Qatar is expecting 2.9 million fans to attend 2022 FIFA event. Doha’s Ministry of Foreign Affairs said the funding follows the Qatari emir’s visit to Pakistan, and comes as an endorsement of Prime Minister Imran Khan’s administration.
Meanwhile, Adviser to the Prime Minister on Finance Abdul Hafeez Shaikh Monday twittered, “Want to thank the Emir of Qatar HRH Sheikh Tamim Bin Hamad Al Thani for announcing US$3 Billion in #deposits and direct #investments for #Pakistan and for #Qatar’s affirmation to further develop relations between the two countries.”