KARACHI: Pakistan is in talks with Saudi Arabia, the United Arab Emirates and China to extend the tenure of their $7.7 billion short term deposits, a move that will ensure long term forex stability of the South Asian nation, Dr. Abdul Hafeez Shaikh, the prime minister’s adviser on finance and revenue, told Arab News in an exclusive interview.
“Last year, when Pakistan was going through the worst balance of payment (BoP) crisis in our history, we were provided financial support by our brotherly countries,” Shaikh said on Monday.
Pakistan’s friendly countries were approached by the government of Prime Minister Imran Khan soon after assuming the office in 2018 as the country’s current account deficit reached $20 billion.
Responding to Pakistan’s call, Saudi Arabia deposited $3 billion while the UAE and China deposited $2 billion and $2.2 billion, respectively. Qatar also contributed by depositing $0.5 billion with Pakistan’s central bank.
“The $7.7 billion secured from the bilateral arrangements provided the much needed balance of payment support to Pakistan,” he added.
“These are short term deposits placed with the central bank in Pakistan at concessional rates,” the PM’s adviser said, adding: “We are in talks with our development partners to move these deposits toward longer tenors.”
Economists say these deposits provided a lifeline to the country’s economy that had higher imports and lower exports.
“The balance of payment support oxygenated the country’s economy that was much need for its survival. The support helped Pakistan not to default on its foreign payment obligations,” Muzzamil Aslam, senior economist, who is familiar with the developments, told Arab News.
Pakistan’s current account deficit (CAD) was $20 billion in 2018 which declined to $13.43 billion during the last fiscal year. Its further decline is also projected for the current fiscal year (2019-20).
“CAD is projected to decline to $4b [or 1.7 percent of the GDP] in the current fiscal year, compared to $20b when the government took office in 2018,” Shaikh said.
The major balance of payment support came from Saudi Arabia which provided $6 billion in financial assistance to Pakistan, with $3 billion in foreign currency support and $3 billion worth of oil on deferred payments. The agreement was signed during the visit of Prime Minister Imran Khan to the Kingdom in October 2018.
Economists say when Pakistan approached the International Monetary Fund (IMF) for the bailout program, the United States had expressed concerns that the money could be used to pay off debts, especially those taken from China.
“After we started getting the IMF assistance, the fund imposed a condition during the first review of the program to roll over these loans instead of paying them back. This was because the US had misgivings that Pakistan will pay the Chinese debt with the IMF money,” Aslam said.
However, the IMF acknowledged in April that “Bilateral creditors have maintained their exposure in line with debt sustainability objectives of the EFF [Extended Fund Facility].”
China maintained their exposure by renewing $2 billion bilateral deposits in March. Saudi Arabia also refinanced $3 billion BoP support loans that matured in November-January, while the UAE rolled over $1 billion BoP support loans in March. The oil facility with Saudi Arabia – worth $3.2 billion – was activated in August 2019 and has also been providing support to the balance of payments, according to the IMF documents.
Instead of frequent rollovers now, the government wants to convert these short term deposits into long tenors. “The IMF is behind this strategy,” Aslam informed. “The conversion will impact the status of these deposits in a way that loan rates will be decided in line with the international benchmark which may be LIBOR+2-3 percent.”
Economists say the conversion of these deposits will positively impact the economy of the country since Pakistan will get some breathing space and an opportunity to improve its overall financial condition. “It will provide long term forex stability. Otherwise, we will be under pressure to pay back $7.7 billion,” Aslam said.
Pakistan seeks Arab creditors, China to convert $7.7 bn into long term loans — Hafeez Shaikh
https://arab.news/ze345
Pakistan seeks Arab creditors, China to convert $7.7 bn into long term loans — Hafeez Shaikh
- Pakistan received $3 billion BoP support from Saudi Arabia, $2 billion from the UAE and $2.2 from China
- Conversion of short term deposit will provide long term financial stability to the country, say experts
Pakistan eyes trade corridors with Belarus to enhance access to Central Asia, Europe
- Communications Minister Abdul Aleem Khan arrives in Minsk on two-day visit to bolster trade, investment ties
- Khan to sign new MoUs during visit, state-run media says amid Islamabad’s push for sustainable economic growth
ISLAMABAD: Communications Minister Abdul Aleem Khan on Thursday stressed the importance of creating trade corridors between Pakistan and Belarus, state media reported, noting that they could be instrumental in helping both countries access markets in Central Asia and Europe.
Pakistan and Belarus have moved closer to foster stronger trade and economic cooperation in recent months. Both countries marked 30 years of diplomatic ties last year. Belarus’s prime minister visited Islamabad in October 2024 to meet key Pakistani civilian and military officials to bolster economic cooperation.
Khan arrived in Minsk on an official two-day visit to the country on Thursday. He met Belarusian Minister of Energy Denis Moroz and the country’s Transport Minister Alexei Lyakhnovich, state-run Associated Press of Pakistan (APP) reported.
“He emphasized the importance of creating trade corridors between the two countries which could play a key role in facilitating access to Central Asian States through routes in Pakistan, China, Afghanistan, or Iran, ultimately opening up pathways to Eastern Europe,” APP reported.
“Abdul Aleem Khan stated that these infrastructure projects would also be a strategic milestone.”
Khan highlighted the potential for “significant improvement” in the communications sector between both countries during his meeting with Belarusian ministers, APP said.
It said the Pakistani minister is being hosted as a state guest in the eastern European country. He will have the opportunity to sign several new memoranda of understanding (MOUs) during his trip, APP said.
Pakistan and Belarus agreed to boost cooperation in industry, media, tourism and other economic sectors during the eighth session of the Pakistan-Belarus Joint Ministerial Commission on Trade and Economic Cooperation held in February this year.
Islamabad has aggressively pushed for trade and investment ties with regional allies such as China, Saudi Arabia, United Arab Emirates, Central Asian countries and others recently in its bid to escape a prolonged macroeconomic crisis.
Pakistan has signed MoUs worth billions of dollars with businesses and entities in China, Saudi Arabia, UAE, Azerbaijan and other countries since last year to ensure sustainable economic growth driven by increasing exports and financial reforms mandated by the International Monetary Fund (IMF).
Pakistan assumes Asian Cricket Council presidency, vows to accelerate sport’s global influence
- Defending champions India are scheduled to host Asia Cup later this year in T20 format
- ACC, governing body for cricket in Asia, includes Pakistan, India, Sri Lanka and Bangladesh
ISLAMABAD: Pakistan Cricket Board (PCB) Chief Mohsin Naqvi on Thursday assumed the presidency of the Asian Cricket Council (ACC), the board confirmed, vowing to enhance the sport’s global influence.
The ACC is the governing body for cricket in Asia, established in 1983, to promote and develop the sport across the continent. It organizes major tournaments like the Asia Cup and works to improve cricket standards, provide financial support and strengthen ties between member countries including India, Pakistan, Sri Lanka and Bangladesh.
Sri Lanka held ACC’s presidency before Pakistan officially took over the post from it on Apr. 3, according to the PCB.
“In accordance with the decision of the Asian Cricket Council, Pakistan has officially taken over the presidency from Sri Lanka Cricket,” the PCB said in a statement.
“Effective immediately, Pakistan will lead the council in its mission to promote and expand cricket across the Asian continent.”
It added that the ACC was “poised to strengthen and expand” cricket’s presence across Asia by fostering growth and unity within the sport.
Meanwhile, in a press release, the ACC quoted Naqvi as saying that he was honored to assume the regional cricketing body’s presidency.
“Asia remains the heartbeat of world cricket and I am committed to working with all member boards to accelerate the game’s growth and global influence,” he said.
“Together, we will unlock new opportunities, foster greater collaboration and take Asian cricket to unprecedented heights.”
The PCB chief also extended his sincere wishes to outgoing ACC president Shammi Silva from Sri Lanka for his leadership and contributions during his tenure.
India will host the next edition of the Men’s Asia Cup cricket tournament in the T20 format in 2025 as a precursor to the T20 World Cup scheduled in the country in 2026.
The 2023 edition, hosted by the PCB, was held in a “hybrid model” as India refused to travel to Pakistan and played their matches in Sri Lanka.
India are the defending Asia Cup champions, and have won three of the last four editions of the tournament. They beat Sri Lanka by 10 wickets in the final of last year’s 50-overs edition in Colombo.
US tariff to have ‘mixed’ impact on Pakistan’s exports— financial analysts
- United States is Pakistan’s largest export destination, importing $5.44 billion of Pakistan’s goods last year
- Analysts say Pakistani exports will become cheaper than those offered by countries hit harder by tariffs
KARACHI: The impact of US President Donald Trump’s decision to impose a reciprocal tariff of 29 percent on Pakistan’s exports is likely to have a “mixed” impact, financial analysts said on Thursday, pointing out that the wide-ranging tariffs will make exports offered by Islamabad’s rivals also costlier.
Trump announced the decision to impose sanctions on several countries on Wednesday, defending the measures as necessary to address long-standing trade imbalances and what he described as unfair treatment of American goods abroad.
The US is Pakistan’s largest export destination, as it imported $5.44 billion of Pakistani goods last year, according to the State Bank of Pakistan. This fiscal year from July through February Pakistan earned $4 billion from its exports to the US, which registered a 10 percent increase over its $3.63 billion exports to the country in the same period last year.
“The impact of these tariffs is expected to be mixed on Pakistan’s exports,” Samiullah Tariq, the group head of research and product development at the Pakistan Kuwait Investment Company Ltd., told Arab News.
Last year, Pakistan’s total exports rose 11 percent to $30.7 billion from $27.7 billion compared to 2023, according to the Pakistan Bureau of Statistics.
Tariq said Pakistani goods would become cheaper than those offered by Bangladesh, China, Vietnam and Cambodia, on whom the Trump administration imposed higher tariffs.
However, he explained that countries such as India, Jordan, Turkiye and certain Central American nations had been targeted with comparatively lower tariffs, making Pakistani goods costlier.
Washington has imposed tariffs of 37 percent, 34 percent, 46 percent and 49 percent on Bangladesh, China, Vietnam and Cambodia, respectively. It targeted India, Jordan and Turkiye with tariffs of 26 percent, 20 percent and 10 percent respectively.
“Duties imposed on China, Cambodia, Indonesia, Vietnam and Bangladesh are higher than Pakistan, while duties imposed on India are 300bps lower than Pakistan,” Topline Securities, a Karachi-based brokerage firm, noted in a report to clients.
TEXTILE TO TAKE A HIT
However, Sana Tawfiq, the head of research at Arif Habib Ltd. said the tariff would test the mettle of Pakistan’s export sector.
“About 90 percent of our total exports to the US account for textiles that are expected to take a hit,” she told Arab News.
She said some food and cement industries are also expected to “feel the pressure.”
“To mitigate the impact, Pakistan must adopt a reciprocal and strategic approach, including reducing energy costs, negotiating tariff relief, and diversifying trade markets,” Tawfiq noted.
Topline Securities also said Pakistani textile exports may bear the brunt of the tariff imposition.
“Theoretically, due to Pakistan’s duty disadvantage with India, Pakistan textile exports may face some pressure,” the brokerage firm said.
Trump’s decision is expected to set back Pakistan’s efforts to revive its economy with the help of the International Monetary Fund’s bailout packages.
The lender wants Islamabad to increase its revenues, attract foreign investments and enhance exports to cope with its longstanding balance of payment crisis.
Pakistan’s stock market closed Thursday’s session with the benchmark KSE-100 index gaining 0.96 percent to close at 118,938 points.
“Worries over 29 percent massive US reciprocal tariff levies on Pakistan and global equity selloff invited early session pressure,” Ahsan Mehanti, chief executive officer at Arif Habib Commodities Ltd., told Arab News.
Pakistan may face increased competition in Europe as countries such as China, Vietnam and Bangladesh, hit harder with Washington’s tariffs, are expected to divert some of their exports from the US to European countries, Topline Securities said in its report.
Khurram Mukhtar, the patron-in-chief of the Pakistan Textile Exporters Association (PTEA), remained confident Pakistan would continue to enjoy a competitive edge over major textile-exporting countries to the US.
“Despite the tariff adjustments, Pakistan will continue to maintain a competitive edge over major textile-exporting countries to the US, owing to its complete supply chain, quality standards and established trade relationships,” Mukhtar told Arab News.
Pakistan fined again for slow ODI over-rate in New Zealand
- Pakistan players fined 5 percent of match fees for being one over short of target on Wednesday
- Visiting team was two overs short, fined 10 percent after losing first ODI by 73 runs on Saturday
DUBAI, United Arab Emirates: Pakistan has been penalized for a slow over-rate against New Zealand in their second one-day international in Hamilton this week.
Match referee Jeff Crowe fined the Pakistan players 5 percent of their match fees after they were one over short of the target on Wednesday after the time allowances were taken into consideration. New Zealand won by 84 runs.
Pakistan captain Mohammad Rizwan “pleaded guilty to the offense and accepted the sanction, eliminating the need for a formal hearing,” the International Cricket Council said on Thursday.
It was the second consecutive match after which Pakistan was fined for a slow over-rate.
The visiting team was two overs short of the target and fined 10 percent after losing the first ODI by 73 runs at Napier last Saturday.
The third and last ODI is at Mount Maunganui on Saturday.
Pakistan’s inflation rate dropped to 0.7 percent in March, lowest in six decades
- Pakistan’s inflation rate stood at 1.5 percent in February and at 20.7 percent during March 2024
- Prices of fresh fruits, eggs, sugar, chicken and readymade garments increased month-on-month
ISLAMABAD: Pakistan’s consumer price index (CPI) inflation rate dropped to 0.7 percent in March on a year-on-year basis, the country’s statistics bureau said on Thursday, the lowest in six decades amid signs of economic recovery.
Pakistan’s inflation rate stood at 1.5 percent in February and 20.7 percent in March 2024, according to data shared by the Pakistan Bureau of Statistics (PBS) in its monthly review of price indices report.
On a month-on-month basis, it increased by 0.9 percent in March as compared to a decrease of 0.8 percent in February. It increased by 1.7 percent in March 2024.
“CPI inflation general decreased to 0.7 percent on year-on-year basis in March 2025 as compared to 1.5 percent of the previous month and 20.7 percent in March 2024,” the PBS said.
The commodities whose prices increased month-on-month included tomatoes (36.35 percent), fresh fruits (18.66 percent), eggs (14.92 percent), sugar (11.48 percent), chicken (10.87 percent), fresh vegetables (6.13 percent), butter (2.70 percent), neat (1.60 percent) and pulse moong (0.70 percent).
While prices of non-food items that increased month-on-month include readymade garments (2.15 percent), tailoring (1.84 percent), liquified hydrocarbons (1.83 percent), cotton cloth (1.74 percent), accommodation services (1.47 percent), hosiery (1.33 percent), education (1.23 percent) and plastic products.
Aggressive policy rate cuts by Pakistan’s central bank and a series of economic reforms by the government have led to a substantial decline in Pakistan’s annual inflation rate.
Pakistan’s inflation rate rose to a record high of 38 percent in May 2023 on account of surging food and fuel costs as Islamabad withdrew energy and fuel subsidies under a deal agreed with the International Monetary Fund (IMF) for a financial bailout package.
In a statement released by the Prime Minister’s Office (PMO), Shehbaz Sharif said the reduction in prices was proof of the “right direction” of the government’s economic policies.
“Currently, the inflation rate in the country is at its lowest level in six decades,” Sharif was quoted as saying by his office.
“This year even during the month of Ramadan, the inflation rate was recorded at its lowest level in the last several decades,” he added.
