Balance of payments crisis over: Asad Umar

ISLAMABAD: Finance Minister Asad Umar on Tuesday said Pakistan had come out of a balance of payment crisis after Saudi Arabia and China equally filled a gap of $12 billion in its payments.

“Our balance of payment (BoP) crisis is over as our gap on the external front of $12 billion has been filled. Saudi Arabia has already provided $6 billion and the remaining is under discussion with China,” Asad Umar said in a joint press briefing with Foreign Minister Shah Mehmood Qureshi here at the Foreign Office.

Asad Umar said that there was no crisis on the balance of payment front and he wanted to make it crystal clear, arguing that the gap of $12 billion was already filled. The finance minister has given this statement at a time when the IMF mission is scheduled to kick-off parleys from today (Wednesday) on formal written request of Islamabad for negotiating a possible bailout package for the ailing economy of Pakistan.

Asad Umar said that talks were underway for getting the BoP support from China and for finalising its exact modalities, a Pakistan high-powered delegation comprising secretary finance and governor State Bank of Pakistan (SBP) would visit China to work out its details.

The minister said that there was a need to resolve the BoP crisis permanently and ultimate solution was boosting up exports. He said that Pakistan had made progress on this front during the recent visit of China where Islamabad and Beijing agreed to double Pakistan’s exports within the current financial year.

“We have been able to get immediate relief through making efforts to double our exports within the current fiscal year,” he said.

Earlier, a statement issued by the Ministry of Finance stated that Pakistan’s high-powered delegation is scheduled to visit China this week to work out the modalities on Islamabad’s request for provision of BoP support. Official sources said that Pakistan made request for BoP support in the range of $3 billion on immediate basis, including $1.5 billion for deposit into the SBP and another $1.5 billion as grant. The loan on soft termsand conditions will be in the range of $2 to $3 billion, so the overall size of the package will be hovering around $6 billion.

Without sharing any details about Islamabad’s request for provision of $3 to $6 billion financial aid made to China, Pakistan on Tuesday stated that it was decided that the next stage of China Pakistan Economic Corridor (CPEC) would focus on industrial expansion, agricultural revitalisation and trade integration of the two economies.

According to official statement issued by the Ministry of Finance, the two sides also held discussions on immediate market access for Pakistan’s exports as well as the BoP support. The top Chinese leadership expressed their strong support and a task force was established by both sides to discuss the matters further. In this connection, a senior level delegation comprising federal secretaries of finance, foreign affairs, planning and development and commerce along with the governor SBP will undertake a visit to China during the current week to work out the modalities with the Chinese authorities in their respective areas.

Prime Minister Imran Khan’s visit to China from 2 to 5 November, 2018 has moved the overall economic relationship between the two friendly countries to the next level. During the visit, several avenues of mutually-beneficial collaboration were identified and a number of memoranda of understanding (MoUs) were signed between the two sides in the sphere of economic cooperation. These included agreements in the area of socio-economic development, poverty alleviation, agriculture, economic and technical cooperation, forestry, earth sciences, higher education and technology.

The two sides noted with satisfaction that CPEC’s first stage, which comprised infrastructure and energy sector improvements, has almost been completed. It was decided that the next stage of CPEC will focus on industrial expansion, agricultural revitalisation and trade integration of the two economies. This phase will help the government of Pakistan in achieving its objectives of job creation and export growth.

According to the China Daily, President Xi Jinping announced a number of measures including lowered tariffs and eased market access intended to promote common growth and building an open global economy.

In his keynote speech at the opening ceremony of the first China International Import Expo in Shanghai, Xi introduced China's plan to boost economic openness and called on the world to promote free trade and facilitate investment.

Xi predicted that China's imports of goods and services would exceed $30 trillion and $10 trillion, respectively, in the next 15 years, in step with the increasing demand of Chinese people in pursuing a better life.

However, Pakistani officials say that now it is yet to be seen that how much Pakistan will be able to boost up its exports in months ahead as Islamabad is facing the largest trade deficit with China.

Pakistan’s trade deficit with China stands at more than $14 billion on per annum basis so without minimising it, the country will not be able to overcome its rising current account deficit.

Shah Mehmood Qureshi said they should not be inquired after every foreign tour as to what did the government get. "Some other things are also achieved during (foreign) visits," he said. Shah Mehmood said the visit of Imran Khan to China has sent a strong message to the international community about their bilateral relations at a time when this strong strategic relationship is moving towards an economic partnership.

“We wanted to send a clear message to the international community that we are close to China and this is a unique relationship which is now moving from a strategic relationship to an economic partnership so as to enlarge our economic footprint,” he said.

The foreign minister said a misconception was given that bilateral relations would not move ahead with the PTI government, but with this recent visit, the already good relations were now further enhanced. He said the Pak-China strategic level dialogue has been upgraded to the level of the two foreign ministers. “Another reason of the visit was to seek how we could stabilise Pakistan’s economy and we sought assistance on this. While stabilising our economy, both sides decided that the second phase of the Free Trade Agreement will be completed soon and by April,” he said.

Highlighting some of the agreements that were signed, Qureshi said that it was important that both sides agreed to allow prisoners from both countries to serve their sentences in their home countries. “Important also was the MoU on poverty alleviation, this is something that we in Pakistan can learn from China. China has taken 700 million people out of poverty in the last 30 years,” he said.

A lot of emphasis, he said, was given to the MoU on agricultural cooperation where Pakistan can benefit from transfer of technology which would go a long way to increase productivity here. “These discussions that we held in China will also give boost to our exports and we remain confident that we will soon double our exports,” he said.

As CPEC move towards its second phase, the foreign minister said deliberations included how to proceed further.

“It was decided that the next stage of CPEC will focus on industrial expansion, agricultural revitalisation and trade integration of the two economies,” he said. “Issues related to Indo-Pak relations and the need for dialogue, Afghanistan, counter terrorism, poverty alleviation corruption and cooperation on multilateral forums were discussed,” said Qureshi. On Afghanistan, the foreign minister said that Pakistan would be participating on the trilateral foreign ministers conference in Kabul together with China, in December.