KARACHI: As an alternative to the International Monetary Fund’s (IMF) bailout program, Pakistani currency dealers have offered to arrange about $24 billion to shore up the country’s foreign exchange reserves for the next two years “in the larger interest of the country,” an official said on Friday.
Cash-strapped Pakistan is currently in talks with the IMF for the completion of the ninth review of the $7 billion bailout program signed in 2019. However, no progress has been made until now to reach a staff-level agreement, even as the government has implemented several harsh conditions to fulfill the lender’s requirements.
Pakistan desperately awaits the disbursement of $1.2 billion from the IMF under the loan program since it would boost the country’s low foreign exchange reserves which currently stand at $4.2 billion, barely enough to cover one month of imports.
The country’s currency dealers have offered to arrange the much-needed dollars in this context through a swap agreement with overseas and local Pakistanis to steer the economy out of the current crisis.
“We offered the government six months back to arrange $24-25 billion through outright purchases from Pakistanis at least for two years,” Malik Bostan, president of the Exchange Companies Association of Pakistan (ECAP), told Arab News on Friday.
Bostan said he repeated the offer during a recent meeting with the members of the Senate Standing Committee on Finance in Islamabad.
“The companies have offered to arrange funds of $1 billion per month for the government so that the country can get rid of the IMF program,” he said, adding that the exchange companies were already contributing $400 million per month to the interbank market.
Asked to further elaborate the plan, the ECAP president said currency dealers would approach overseas and local Pakistanis and offer currency swap agreement for the well-being of the country.
“Under the agreement, we will take loans for a certain agreed period and offer them the current exchange rate,” he explained. “They will benefit from the exchange rate fluctuations, and appreciation at the end of the contract term.”
Bostan said the idea to raise dollars for Pakistan was not new as a similar approach was adopted back in 1998 through which $10 billion were raised with the permission of then prime minister, Nawaz Sharif, and central bank governor, Muhammad Yaqub.
“We had toured Saudi Arabia, the United Arab Emirates, and the United States, and approached Pakistanis, and they had responded well,” he continued. “The country is still reaping the benefit of 1998 fundraising.”
The ECAP official said the exchange companies needed the government’s approval to implement the proposed financing arrangement which required direct dollar purchases from abroad and people at home.
While Bostan said the government’s nod will allow the country to get the much-needed funds, Pakistani economists termed the idea “unsustainable” and risky which could put the country back on the Financial Action Task Force’s (FATF) radar.
“The financing solution proposed by the exchange companies may provide short-term relief, but it is not a long-term solution and there is a risk of putting the country back on the FATF watch list,” Dr. Sajid Amin, deputy executive director at the Sustainable Development Policy Institute (SDPI), told Arab News. “The government must stick to the IMF program and complete the reforms that the country needs for its long-term survival.”
Amin said the current IMF program seemed “tough” but it was because the authorities had failed to implement structural reforms which were mutually agreed with the fund.
“We have been playing politics with the IMF program which has delayed the implementation of prior actions,” he continued.
Amin added the conditions seemed tough because of the implementation timeframe which was short.
Pakistan has approached the IMF 23 times in its history to get bailout programs but has only completed one of them.
Pakistan currency dealers offer $24 billion loan to government as alternative to IMF bailout
https://arab.news/5yab5
Pakistan currency dealers offer $24 billion loan to government as alternative to IMF bailout
- Local dealers say financing will be arranged through currency swap agreements with local and overseas Pakistanis
- Economists say the proposed plan is not sustainable and may put the country back on FATF’s radar screen
Pakistan, China call for more ‘visible, verifiable’ actions to dismantle ‘terrorist’ groups in Afghanistan
- Foreign ministers of China, Pakistan co-chair seventh round of strategic dialogue in Beijing to review bilateral cooperation, regional situation
- Pakistan accuses Kabul of facilitating attacks launched by militant outfits from Afghanistan’s soil, a charge Kabul has repeatedly denied
ISLAMABAD: Pakistan and China on Monday urged Afghanistan to take more visible actions to dismantle “terrorist organizations” based in its country, vowing to work with world powers to encourage Kabul to adopt moderate policies and integrate into the international community.
Ties between Pakistan and Afghanistan remain strained as Islamabad alleges militant outfits, mainly the Tehreek-e-Taliban Pakistan (TTP) group, uses Afghan soil to launch attacks against Pakistan. Islamabad accuses the Afghan Taliban government of facilitating these attacks against Pakistan, charges Kabul have repeatedly denied.
The joint statement by China and Pakistan was released after a meeting of both countries’ foreign ministers, Ishaq Dar and Wang Yi, in Beijing. Dar and his Chinese counterpart co-chaired the Seventh Round of China-Pakistan Foreign Ministers’ Strategic Dialogue in Beijing on Jan. 4 where they reviewed cooperation in trade, investment, economic sectors, counterterrorism, defense and regional matters.
“The two sides called for more visible and verifiable actions to dismantle and eliminate all terrorist organizations based in Afghanistan which continue to pose serious threats to regional and global security, and prevent terrorist organizations from using the Afghan territory for terrorism against any other country and to endanger any other country,” the statement read.
The joint statement said the two countries will work with world powers to encourage Kabul to adopt an inclusive political framework, moderate policies, and pursue good neighborliness.
On bilateral cooperation, China and Pakistan said they had agreed to focus on industry, agriculture and mining, and also promote the building and operation of the Gwadar Port in southwestern Pakistan.
“The two sides will deepen cooperation in areas such as trade and investment, information technology, science and technology, cybersecurity, technical and vocational training and education, and people-to-people and cultural exchanges,” the statement said.
“The two sides agreed to further strengthen cooperation in the financial and banking sectors, including extending mutual support at regional and international multilateral financial forums. Pakistan appreciated China for providing support for its fiscal and financial sectors.”
The joint statement said China commended Pakistan’s “comprehensive measures” to combat “terrorism” and protect Chinese personnel, projects and institutions in the country.
“The two sides reiterated their commitment to combating terrorism in all its forms and manifestations with zero tolerance, and agreed to further deepen all-round cooperation on counter-terrorism and security, and make concerted efforts to ensure that the China-Pakistan Belt and Road cooperation advance in a secure and smooth manner,” the statement said.
Pakistan and China expressed their willingness to conduct a transboundary water resources cooperation, stressing the importance of fulfilling international legal obligations. The statement comes as Pakistan frequently accuses India of violating a water-sharing agreement between the two neighbors, claiming New Delhi purposefully diverts the flow of water away from its territory.
Islamabad has warned that any move by New Delhi to stop or divert the flow of Indus rivers to Pakistan will be considered an “act of war.”
Pakistan and China also demanded an unconditional, comprehensive and permanent ceasefire in Gaza in their joint statement, reaffirming their support for the Palestinian people’s right to self-determination and for the implementation of a two-state solution in the Middle East.
“The two sides also expressed their concern at the situation in the occupied West Bank, and urged the need for urgently addressing it,” the statement said.
