China requested to roll over $2bn deposits, Pakistan tells IMF

ISLAMABAD: Pakistan has informed the International Monetary Fund (IMF) that Islamabad had made a request to China for the rollover of $2 billion SAFE (State Administration of Foreign Exchange) deposits for another one-year period.

“We have already made the request to the Chinese side for granting rollover of $2 billion SAFE deposits, which is going to mature by end of the ongoing month,” top official sources confirmed to The News on Monday.

Pakistan and the IMF held virtual parleys on Monday night for moving towards striking a staff-level agreement as the Ministry of Finance and State Bank of Pakistan (SBP) tabled the external financing plan before the IMF with the desired aim of jacking up the dwindling foreign exchange reserves, held by the SBP up to $10 billion mark till end of June 30, 2023.

“Under the planned schemes of things, the revival of the IMF programme will enable Islamabad to muster up the required dollar funding from all possible avenues including multilateral, bilateral and commercial financing as well as getting rollover of upcoming China’s SAFE deposits to the tune of $2 billion,” top official sources told The News. The total Chinese SAFE deposits stood at $4 billion and the remaining maturity would become due in the coming few months period.

Another top official said that China granted assurances verbally for granting rollover of SAFE deposits of $2 billion, but it would be preferred that it should be done by Beijing and then announce accordingly in the coming weeks.

Pakistani side informed the IMF that Islamabad implemented all tough measures and now both sides should move towards the signing of the staff-level agreement without wasting any further time.

However, the IMF’s Resident Chief Esther Perez Ruiz was quoted by Reuters news agency in its story saying “All IMF programme reviews require firm and credible assurances that there is sufficient financing to ensure that the borrowing member’s balance of payment is fully financed, over the remainder of the programme”.

Finance Minister Ishaq Dar had told reporters last week that external financing confirmation was not part of prior action of the IMF for signing of a staff-level agreement and it was agreed between the two sides that the Fund would help Islamabad secure its confirmation on external financing needs.

However, sources said that there were nine tables under the Memorandum of Economic and Financial Policies (MEFP) that require to be fulfilled with the official figures, and one of the tables was related to envisaging the Net International Reserves (NIR) as an indicative target which could not be fulfilled without incorporating the external financing needs of the programme period.