UAE’s $2 billion deposit to help Pakistan make international payments: SBP

The State Bank of Pakistan (SBP) said on Sunday that the deposit of $2 billion from the United Arab Emirates in the country’s central bank would help maintain foreign exchange reserves and make necessary international payments. (APP)
Updated 10 March 2019
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UAE’s $2 billion deposit to help Pakistan make international payments: SBP

  • Saudi Arabia, UAE have extended $6 billion cash assistance to Pakistan in recent months
  • Economists urge government to initiate long-term measures to fix the fragile economy

ISLAMABAD: The State Bank of Pakistan (SBP) said on Sunday that the latest deposit of $2 billion from the United Arab Emirates in the country’s central bank in the next couple of days would help maintain foreign exchange reserves and make necessary international payments.

The UAE announced a $6 billion financial assistance package for Pakistan in December last year, including $3 billion in cash deposits in the state bank’s reserves and a credit line of another $3 billion for the supply of oil to Islamabad on deferred payment. Abu Dhabi released the first tranche of $1 billion in cash deposit out of the pledged $3 billion in January 2019.

The SBP and Abu Dhabi Fund for Development on Saturday signed an agreement for release of the second tranche of $2 billion. This will push Pakistan’s foreign exchange reserves over $10 billion, enough to cover three months import bill.

“These funds are expected to be received in the state bank’s account in next three to four days,” SBP spokesperson Abid Qamar told Arab News on Sunday.

He said the $2 billion deposit by the Abu Dhabi will have a “positive impact” on the country’s overall economic health and help overcome international payments pressure. “We will be able to maintain our reserves with the UAE’s financial help and make foreign exchange related payments,” he added.

The UAE’s financial assistance comes at a time when Islamabad is struggling to stave off a balance of payments (BoP) crisis and stabilize the economy by cutting the import bill. Pakistan has also been negotiating with the International Monetary Fund (IMF) since November last year for a bailout package, but this is yet to materialize due to “tough economic conditions” the Fund may impose before it offers the financial assistance.

Muzamil Aslam, senior economist and former CEO of EFG-Hermes Pakistan, said the financial assistance from the UAE and Saudi Arabia in recent months has boosted confidence of the government, besides improving the dwindling foreign exchange reserves.

“When this government assumed the charge in August last year, they will have foreign exchange reserves to cover the import bill of just fifteen days, but now they are in a position to pay for three months imports – thanks to generous financial support from friendly countries,” he told Arab News.

Saudi Arabia has already deposited $3 billion in cash in the State Bank of Pakistan in three equal monthly tranches by January 2019. The two countries have also agreed upon the modalities for supply of oil worth $3 billion on credit from this month.

Dr. Athar Ahmad, senior economist, urged the government to improve the revenue collection, introduce cogent reforms in the financial system and cut the import bill significantly in coming months to fix the economy.

“We need to initiate long term measures to stabilize the economy including significant increase in our exports in the next couple of years,” he told Arab News, “otherwise all financial assistance from Saudi Arabia and the UAE will prove to be a temporary measure.”


US wins WTO ruling against China grain import quotas

Updated 19 min 27 sec ago
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US wins WTO ruling against China grain import quotas

GENEVA: The United States won a World Trade Organization (WTO) ruling on Thursday against China’s use of tariff-rate quotas for rice, wheat and corn, which it successfully argued limited market access for US grain exports.
The case, lodged by the Obama administration in late 2016, marked the second US victory in as many months. It came amid US-China trade talks and on the heels of Washington clinching a WTO ruling on China’s price support for grains in March.
A WTO dispute panel ruled on Thursday that under the terms of its 2001 WTO accession, China’s administration of the tariff rate quotas (TRQs) as a whole violated its obligation to administer them on a “transparent, predictable and fair basis.”
TRQs are two-level tariffs, with a limited volume of imports allowed at the lower ‘in-quota’ tariff and subsequent imports charged an “out-of-quota” tariff, which is usually much higher.
The administration of state trading enterprises and non-state enterprises’ portions of TRQs are inconsistent with WTO rules, the panel said.
Australia, Brazil, India, and the European Union were among those reserving their rights in the dispute brought by the world’s largest grain exporter.
In a statement, US Trade Representative Robert Lighthizer and Secretary of Agriculture Sonny Perdue welcomed the decision, saying China’s system “ultimately inhibits TRQs from filling, denying US farmers access to China’s market for grain.”
If China’s TRQs had been fully used, $3.5 billion worth of corn, wheat and rice would have been imported in 2015 alone, it said, citing US Department of Agriculture estimates.
The two WTO rulings would help American farmers “compete on a more level playing field,” the USTR statement said, adding: “The (Trump) Administration will continue to press China to promptly come into compliance with its WTO obligations.”
The latest WTO panel said that the United States had not proven all of its case, failing to show that China had violated its public notice obligation under the General Agreement on Tariffs and Trade (GATT) in respect to TRQs.
China’s Ministry of Commerce said in a statement on Friday it “regrets” the panel’s decision and that it would “earnestly evaluate” the panel’s report.
China would “handle the matter appropriately in accordance with WTO dispute resolution procedures, actively safeguard the stability of the multilateral trading system and continue to administer the relevant agricultural import tariff quotas in compliance with WTO rules,” it said.
Either side can appeal the ruling within 60 days.