KARACHI: The Saudi Arabian government has made the possibility of offering up to$ 3 billion in fresh deposits to Pakistan’s central bank tentative on Islamabad’s reanimation of the International Monetary Fund’s (IMF) stalled bailout programme, officers said on Monday.
“ They indicated that addresses on farther deposits are only possible if Pakistan goes back to the IMF programme,” a functionary at the finance ministry, who asked not to be named, told The News.
Last Time, Saudi Arabia deposited$ 3 billion in the State Bank of Pakistan (SBP) for one time at 4 interest under a support package for the country’s foreign reserves. The support package also included a $1.2 billion canvas loan installation.
A statement followed a visit by Prime Minister Shehbaz Sharif to Saudi Arabia before this month said the two countries will bandy the possibility of supporting the Kingdom’s$ 3 billion deposit in Pakistan central bank by extending its term” or through other options”.
The functionary said Pakistan had sought a fresh deposit and canvas backing installation during the visit of PM Shehbaz. Judges said the country incontinently needs to renew the stalled$ 6 billion loan programme to stave off a balance of payment extremity and help shore up its frugality.
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The profitable turbulence facing the country was underscored when its three close abettors Saudi Arabia, United Arab Emirates and China declined to financially support Pakistan without bringing the IMF on board.
With the central bank, foreign exchange reserves abating to a$10.5 billion, just enough to cover lower than two months of significance, the detention in the finalisation of new deals from the friendly countries urged the PMLN- led coalition government to start accommodations with the IMF for the reanimation of the bailout.
The government of PM Shehbaz has requested Saudi Arabia not to withdraw$ 3 billion deposits from the SBP, but to extend the maturity on this debt. Pakistan is awaiting a rollover of$2.3 billion in Chinese marketable loans. Another$ 1 billion Chinese deposit is growing this and the coming month.
Islamabad and the Fund are likely to begin policy-position conversations on May 18 in Doha subject to start withdrawing energy subsides from May 15 to revive the programme and extend its term and size to$ 8 billion.
Judges said the government will have to make some veritably tough political choices, especially on the financial side — adding energy prices. In February, the former high minister Imran Khan blazoned the freezing of electricity tariffs and retail energy prices till the coming budget against Pakistan’s commitment with the IMF to maintain financial tightening.
“ Extension of the IMF Programme and increase in backing are secondary considerations for the time being. The immediate demand is to secure the reanimation of the suspended programme as that’s a precondition for further bilateral and multinational loans which are needed to meet the debt disbursements coming due shortly,” said Pakistan Business Council CEO Ehsan Malik.
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“ Also the Saudi deposit is contingent on the IMF programme. A precondition for reanimation of the IMF Programme is a reversal of energy subventions, which is a hard call that the government will find delicate to take under the present political conditions,” Malik added.
Fahad Rauf, the head of the exploration at Ismail Iqbal Securities said it appears that overflows from friendly countries are dependent upon IMF programme resumption.
“ IMF isn’t wrong in asking to cut subventions in order to stop the financial bleeding. I suppose the government. would try to renew deals which will yield further overflows in quick time ( half of the programme finances pending). For that to be, some painful adaptations will have to be taken, especially the increase in petroleum and electricity prices,” Rauf said.
Out of the total IMF package worth$ 6 billion, the country has drawn$ 3 billion so far.
“ An only feasible option for Pakistan is to renew the IMF program without any detention. With the IMF other sources of finances will also come by. Some bitter capsules are necessary though it’ll be unpopular,’ said Mohammed Sohail, CEO at Topline Securities.
