Pakistan may use Chinese Yuan to pay for the 750,000 barrels of discounted Russian crude oil set to be imported in June, a media report said on Thursday, as the cash-strapped country struggles with high external debts.
A Russian delegation arrived in Islamabad in January this year to hold talks and settle technical issues such as insurance and mortgage
Pakistan may use Chinese Yuan to pay for the 750,000 barrels of discounted Russian crude oil set to be imported in June, a media report said on Thursday, as the cash-strapped country struggles with high external debts.
Pakistan placed its first order for discounted Russian crude oil last month, a decision expected to provide some relief to the people already hit by skyrocketing inflation.
“Pakistan will pay the price of crude most probably in China’s currency—Yuan and the Bank of China may play its role for transactions,” a senior official of the Energy Ministry told The News International newspaper.
However, the official refused to divulge the fine details about the mode of payment and the discount, stressing that it was not in the country's interest. Russia also does not want to disclose the details, fearing backlash from the other countries buying oil directly from Moscow, the official said.
“Russia will provide URAL crude in the test cargo, and most probably, Pakistan Refinery Limited (PRL) will be tasked to refine the Russian crude,” he added.
Pakistan, which is currently grappling with high external debt and a weak local currency, is hopeful that snapping crude at discounted rates from Russia will stabilise oil prices in the country.
According to the deal, Pakistan will only import crude oil from Russia and refine it through a local dealer.
In December last year, Russia refused to provide Pakistan with a 30 per cent discount on its crude after the Pakistani delegation asked for a price reduction.
A Russian delegation arrived in Islamabad in January this year to hold talks and settle technical issues such as insurance and mortgage.
Energy accounts for the most significant share of Pakistan’s imports, and cheaper oil from Russia will help Pakistan in containing the ballooning trade deficit and balance-of-payments crisis.
Pakistan's foreign exchange reserves stood at "$4,457.2 million, down by $6 million, as compared to $4,462.8 million on April 20," The Express Tribune newspaper reported on Friday.
The cataclysmic floods last year inundated a third of the country, displaced more than 33 million and caused economic damages to the tune of USD 12.5 billion to Pakistan’s already teetering economy.
Pakistan and the IMF have failed to reach a staff-level agreement on the much-needed $1.1 billion bailout package aimed at preventing the country from going bankrupt.
The funds are part of a $6.5 billion bailout package the IMF approved in 2019, which analysts say is critical if Pakistan is to avoid defaulting on external debt obligations.