Pakistan Tells IMF It Requested China To Roll Over $2 Billion Deposits: Report

Cash-strapped Pakistan has communicated to the IMF that it has requested China to roll over its USD 2 billion deposits for another year, a media report said on Tuesday, as the country awaits a much-needed USD 1.1 billion tranche of funding from the global lender. “We have already made the request to the Chinese side for granting rollover of USD 2 billion State Administration of Foreign Exchange (SAFE) deposits, which is going to mature by the end of the ongoing month,” The News International newspaper reported, quoting sources as saying.

According to the report, the Ministry of Finance and State Bank of Pakistan (SBP) shared their external financing plan in virtual talks with the International Monetary Fund (IMF) on Monday to strike a staff-level agreement with the Washington-based lender. Pakistan communicated to the IMF its plans to raise its dwindling foreign exchange reserves to USD 10 billion by the end of June. “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,” the top official source was quoted as saying in the report. The total Chinese SAFE deposits stood at USD 4 billion, and the remaining are due to mature in a few months. China, a close ally of Pakistan, gave verbal assurances of approving the rollover of the USD 2 billion SAFE deposits, another official said, adding that an official announcement by Beijing after taking the step would be preferred.

Pakistan informed the IMF about implementing various measures on the Fund's request for the release of the USD 1.1 billion tranche under the USD 7 billion loan facility. It suggested that both sides should now move towards signing the staff-level agreement (SLA) without wasting further time. Finance Minister Ishaq Dar told reporters last week that external financing confirmation was not part of the prior action of the IMF for signing a staff-level agreement. He added that both sides agreed that the Fund would help Islamabad secure its confirmation on external financing needs. However, sources said that there were nine tables under the Memorandum of Economic and Financial Policies (MEFP) that need to be fulfilled with the official figures and one of the tables was related to envisaging the Net International Reserves (NIR) as an indicative target which could not be fulfilled without incorporating the external financing needs of the programme period, according to the report.

Pakistan received USD 700 million from all-weather ally China last month to help its ailing economy before the finalisation of talks with the IMF for financial assistance. It is set to receive another USD 1.3 billion from Beijing to shore up its fast-depleting forex reserves, Finance Minister Ishaq Dar said last week. Pakistan and the IMF have been holding virtual talks after the two sides held 10 days of intensive negotiations with an IMF delegation in Islamabad from January 31 to February 9, which failed to reach an agreement on the USD 1.1 billion tranche of funding from the global lender.