ISLAMABAD: China has approved the rollover of $2 billion State Administration of Foreign Exchange (SAFE) deposits for a year, reported The News on Friday.
“Yes,” Finance Minister Ishaq Dar replied to the publication when asked about getting the rollover of $2 billion SAFE deposits.
It was one of the requirements of the IMF for getting the rollover of Chinese SAFE deposits for meeting external financing needs in order to move towards striking the much-awaited staff-level agreement.
There are nine tables under the Memorandum of Economic and Financial Policies (MEFP) that require to be filled.
One of the tables is related to the Net International Reserves (NIR) as an indicative target, which cannot be fulfilled without incorporating the external financing needs of the programme period till the end of June 2023.
IMF has asked Pakistan to bridge the gap of $6 billion is simply an attempt to ensure its credibility. Non-materialisation may result in Pakistan sliding into default.
The Fund was forced to put forth this condition on the negotiating table largely because representatives of Gulf countries on the Executive Board had made commitments before the approval of the seventh and eighth reviews for providing financial assistance to Islamabad in different forms. These included additional deposits and investments.
Now, all eyes are on the Kingdom of Saudi Arabia (KSA), the UAE and Qatar to bail out Pakistan’s struggling economy.
The Fund has informed Islamabad that its credibility would also be at stake if the staff-level agreement is finalsied and Pakistan fails to materlise its commitment from the bilateral partners, it might slide the country into the default zone.
The IMF wants to find the reasons why Pakistan’s bilateral partners are not willing to fullfill their earlier commitments. In such circumstances, the nod of Saudi Arabia, the UAE and Qatar can only help Islamabad in striking a staff-level agreement.
Only China had come forward to rescue Islamabad by fulfilling its commitments on the re-financing of its commercial loans as well as the rollover of its SAFE deposits.