Wednesday September 22, 2021

China may park $2 billion in Pakistan reserves this month

In a positive development after successful meeting of PM Imran Khan with President Xi Jinping, China is most likely to transfer $2 billion in Pakistan reserves sometime in the ongoing month of December.
December 17, 2018

ISLAMABAD: In a positive development, China is most likely to park $2 billion in Pakistan reserves sometime in the ongoing month of December, and, more importantly, the economic diplomacy with the UAE is also going to fetch the dividends. And in the month of January 2019, the country is most likely to attain $6 billion facility as is managed from Saudi Arabia, a senior official, privy to the development, told The News.

“UAE will also deposit $3 billion in Pakistan reserves, but in installments’ mode, and would also extend oil facility of $3 billion on deferment payment too.”

To a question the official said that China will deposit $2 billion not in installments but most likely in one-go. He further explained saying that apart from it, Pakistan authorities are also in process to finalise the purchase of 15 billion RMBs (Yuan) at commercial rate almost at the cost of over $2 billion for trade with China in local currency which will help Pakistan come out of US dollar’s pressure too.

The expected relief from China in December and from the UAE in January next year will provide mammoth solace to the PTI government. However, he said, China wants Pakistan not to highlight its assistance for strengthening the reserves.

The official said that the latest statement by Asad Umar that Pakistan is not in a hurry for the IMF bailout package indicates that impending relief from China and UAE to support the foreign reserves is on the cards.

The official, while referring to Asad Umar, the Finance Minister of Pakistan, who is also on the record saying balance of payment issue is over, said that Mr Umar was in knowledge that things are moving with China and UAE in positive trajectory and now behind-the-scene talks with both the countries have got matured indicating that China and UAE are all set to come forward to bailout Pakistan from the current economic morass.

Pakistan has already got $2 billion out of $3 billion promised by S Arabia to strengthen the foreign exchange reserves. Only $1 billion is left that Pakistan is yet to receive from S Arabia. According to State Bank of Pakistan Abid Qamar country will get remaining $1 billion from S Arabia in the month of January 2019. Apart from it, Pakistan has started availing the oil facility of $3 billion on defer payment.

However, the official said that Pakistan’s authorities are still in touch with IMF for about $6-7 billion package. Pakistan direly needs the comfort letter for the Fund for move financial ties with international financial institutions (IFIs).

It is pertinent to mention here that The News, in its edition of November 7, 2018, had published the story of this scribe quoting a cabinet member that China has indicated that it will place $2 billion in Pakistan reserves to provide Pakistan’s financial managers a sense of confidence with regard to reserves situation.

The News also broke the story while quoting Federal Commerce Minister Razzak Dawood that Beijing offered Pakistan to double its exports to China from $1.2 to $2.2 billion by end of ongoing financial year 2018-19 and in case Pakistan succeeds to do that, China will also encourage Pakistan to increase it exports by one billion dollars more.

In addition, Beijing also indicated to extend to Pakistan a special quota for export of sugar and rice which will also help Pakistan have a massive surge in exports to China. This will help reduce trade deficit with China which stands at over $14 billion. The official said that Pakistan can increase its exports by just $500 million by sending to Chinese market one million tons sugar and one million tones rice.

He said China’s imports stand at $2 trillion, but Pakistan entrepreneurs lack the ability to harness even one percent share in China’s total imports. But, unfortunately, Pakistan has not required export surplus to avail the Chinese offer to triple its exports to China.