Keeping economy, CPEC intact: Pakistan seeks friends’ help to avoid IMF bailout

ISLAMABAD: In order to keep its economy afloat and avoid the IMF bailout package to ensure smooth running of $60 billion China Pakistan Economic Corridor (CPEC) project, Pakistan has shared different proposals with friendly countries, especially Saudi Arabia and China.

The friendly countries have been requested to provide Islamabad with $6 to $8 billion breathing space in shape of cash grants, parking money as safe deposits into the central bank, allowing payment of imports in Pak Rupee and provision of oil imports at deferred payment.

“We have worked out proposals and shared the same with our friendly countries with the hope that all is going well for Pakistan. We have proposed to China to allow whole imports bill or at least half payment in Pak Rupee as trade deficit with Beijing had ballooned to $12.5 billion last fiscal year. With this one provision, Pakistan can get relief in terms of reduced reliance on the dollar,” official sources in Finance Ministry confirmed to The News Tuesday.

Pakistan and China placed swap agreement and it needed to be expanded up to the level where the former could be permitted to make payments of import bill in Pak Rupee instead of US dollar.

Without the much-needed breathing space, Pakistan will be left with no option but to knock at the door of the IMF. In that scenario, there will be no smooth implementation of CPEC, official sources privy to internal discussions shared with The News.

Prime Minister’s Adviser on Finance Miftah Ismail confirmed to The News last week that they had contacted friendly countries for assistance in managing economy for next financial year. The request has been made at a time when the economic managers are preparing budget 2018-19. The working done by the Ministry of Finance, which was also shared with the ambassador of a friendly country shows that Islamabad considers that CPEC could only run in a smooth manner if Islamabad successfully avoids bailout package from the IMF so China will have to come forward to allocate special provisions for keeping Pakistan’s economy afloat at a time when the gross financing requirement was estimated to touch $16 billion in the outgoing fiscal year.

Another proposal was to request China to park $4 to $5 billion into the State Bank of Pakistan (SBP). If China can finance the US deficit by parking $500 billion into the US treasury then why can’t they provide $5 billion for keeping it into the SBP safe deposits?

Saudi Arabia could provide either cash grants or oil at deferred payments as they had done in the past to rescue Islamabad at difficult times. The PML-N government seems confident that these proposals would get through to friendly countries helping Pakistan to avoid seeking a fresh IMF bailout package after completion of the current government’s tenure.

“It is yet to be seen whether it’s only wish or it can be materialised,” said a top official, adding, “It depends upon Islamabad’s ability to successfully convince the friendly countries that we have the capacity to overcome our woes after getting this “breathing space” because no one could rescue holders of begging bowl forever.