Pakistan has informed the International Monetary Fund (IMF) that Islamabad has requested China for rollover of USD 2 billion SAFE (State Administration of Foreign Exchange) deposits for another one-year, The News International reported.
“We have already made the request to the Chinese side for granting rollover of USD 2 billion SAFE deposits, which is going to mature by end of the ongoing month,” The News International reported citing sources.
On Monday, Pakistan and IMF held a virtual meeting for moving towards striking a staff-level agreement between the two sides, as per the news report. Pakistan’s Ministry of Finance and State Bank of Pakistan (SBP) tabled the external financing plan before the IMF with the goal of increasing the dwindling foreign exchange reserves, held by the SBP up to USD 10 billion mark till end of June 30, 2023.
A top official sources said that the revival of the IMF programme will allow Islamabad to increase required dollar funding from all possible avenues, including getting rollover of upcoming China’s SAFE deposits to the tune of USD 2 billion under the planned schemes, as per the news report.
As per the news report, the total Chinese SAFE deposits stood at USD 4 billion and the remaining maturity will become due in the coming months.
According to The News International, the top official sources said, “Under the planned schemes of things, the revival of the IMF programme will enable Islamabad to muster up the required dollar funding from all possible avenues including multilateral, bilateral and commercial financing as well as getting rollover of upcoming China’s SAFE deposits to the tune of USD 2 billion.”
Pakistani side informed the IMF that Islamabad implemented all harsh measures and both sides should move towards signing the state-level agreement, as per the news report. Last week, Pakistan’s Finance Minister Ishaq Dar said that external financing confirmation was not part of the prior action of the IMF for signing a state-level agreement, as per the news report.
Citing sources, the report said there were nine tables under the Memorandum of Economic and Financial Policies (MEFP) that require to be fulfilled with the official figures. However, one of the tables related to envisaging the Net International Reserves (NIR) could not be fulfilled without incorporating the external financing needs of the programme period.
Last week, the State Bank of Pakistan has increased the interest rate by a massive 300 basis points (bps) taking it to a record-high level of 20 per cent, in accordance with the conditions set by the International Monetary Fund, The News International reported.
The Monetary Policy Committee (MPC) has taken the decision to raise the policy rate to its highest level since October 1996 in an attempt to “anchor inflation expectations as it is critical and warrants a strong policy response,” as per the news report. Pakistan’s Central Bank increased the interest rate by 300 bps taking the total increase to 1,050 bs since January 2022 to counter rising inflation.