PM Shehbaz Sharif to discuss $3bn Saudi deposits rollover

ISLAMABAD: Amid dwindling foreign currency reserves that touched $7.5 billion, Pakistan requires immediate financial support from friendly countries such as Saudi Arabia and China as well as from the IMF in order to avert the balance-of-payment crisis.

Prime Minister Shehbaz Sharif, along with his team including Minister for Finance Ishaq Dar, is visiting the Kingdom of Saudi Arabia currently, where he would discuss with the authorities rollover of $3 billion deposits, additional financial support and continuation of oil facility on deferred payment as well as materialising $10-12 billion potential investment for construction of Petrochemical Complex at Gwadar Port.

Pakistani authorities are also considering making requests for allowing KSA aid for the utilisation of budgetary support during the current fiscal year. The Pakistani delegation will also hold a meeting with Saudi Development Fund (SDF) as its delegation is also expected to visit Pakistan next month to finalise future investment for the construction of a refinery in Gwadar.

Then the premier Shehbaz Sharif also plans to visit China next month. Pakistan owes China $23 billion in bilateral debt, out of which it will request for rollover of SAFE deposits and commercial loans to the tune of $6.3 billion as well as seeking additional support for fulfilling yawning external financing requirements for the current fiscal year.

The premier will ask China for additional money as well as kick-starting the second phase of CPEC [China-Pakistan Economic Corridor] for launching cooperation on industrial cooperation, agricultural cooperation and others. Pakistan requires $32 to $34 billion in external financing requirements in the current fiscal year. Islamabad has so far managed external dollar inflows of $2.23

billion in the first three months of the current fiscal year. The ADB signed a loan agreement of $1.5 billion on Monday in the presence of PM Shehbaz Sharif before his departure for Saudi Arabia and it is hoped that the money would be disbursed within the ongoing week.

On the IMF front, Pakistan and the IMF high-ups have decided to keep the upcoming review talks for a shorter period so the official data is being shared and questions raised by the IMF are being responded to by Pakistani high-ups.

In the wake of severe floods, the relevant quarters have not yet finalised the official data because of which the upcoming review talks might be delayed for a couple of weeks. The authorities are expecting that the tentative plan for talks might be fixed for Nov 5, 2022, but the venue was not yet firmed.

However, both sides have not yet been able to finalise the exact schedule for upcoming talks for the completion of the 9th review and release of the next tranche of $1 billion under the Extended Fund Facility (EFF). The finance minister had shared a tentative plan for holding review talks from Oct 25, 2022, but the IMF director for the Middle East had stated that it would be done in Nov 2022.

When this scribe contacted the Ministry of Finance high-ups for seeking comments, they replied that no dates for review talks were finalised yet. “It was agreed with the IMF that to ensure a short formal review mission, work will be done beforehand. So, data is being shared and questions are being responded to,” they added.

Although all officials are tight-lipped, the authorities concerned argue that the Net International Reserves (NIR) held by the State Bank of Pakistan and the restricting of the budget deficit within the envisaged limits might prove contentious issues in coming review talks between the two sides.