Under Plan B, Pakistan to seek $3-4bn from friendly countries

• Plan B to be implemented if officials fail to complete 9th review.
• However, Saudi Arabia, UAE have linked deposits with IMF deal.
• "This arrangement is under active consideration," sources say.

ISLAMABAD: Keeping in view the possibility of a continued deadlock with the International Monetary Fund (IMF) till the end of June 2023, Pakistan — under the much-hyped Plan B — is left with no option but to make a request to its bilateral partners for additions deposits of $3 billion, The News reported Sunday.

The Q Block (Ministry of Finance) is contemplating all available options to bridge financing from bilateral friends to avert the looming crisis on its external accounts in case the ninth review is not completed.

It should be noted that the IMF programme is scheduled to expire on June 30, 2023. Both sides, the IMF and Pakistan, had gone public with their apprehensions despite showing their commitment to remain engaged for the completion of the ninth review under the $6.5 billion Extended Fund Facility (EFF) programme.

“With the provision of bridging financing gap of $3-$4 billion from bilateral friends, Pakistan can manage its financing needs. This arrangement is under active consideration and will be implemented to avoid the danger of default in the next few months till the end of October or November 2023,” top official sources said. 

It may only be wishful thinking as friendly countries like Saudi Arabia and the United Arab Emirates (UAE) have linked their additional deposits of $2 billion and $1 billion respectively with the signing of the staff-level agreement and revival of the IMF programme.

“This arrangement is in our minds and we will request additional deposits of $3 billion from our bilateral friends and hope it will be done. If it is materialised, then it will help Islamabad pass the next few months without fear of default,” an official said.

Meanwhile, Finance Minister Ishaq Dar said that China would grant rollover of $1 billion and $300 million commercial loan re-financing within the ongoing month, so $2.3 billion would not deplete from the foreign exchange reserves by the end of June 2023.

In his televised speech on Saturday, Dar said that Pakistan had paid back $1 billion to China Development Bank under its devised strategy and another $300 million to the Bank of China before their due date with the understanding that it would be refinanced as early as possible.

Both of these Chinese banks, he said, agreed not to charge anything as a penalty. China had refinanced $1 billion by the China Development Bank and it was the fastest execution. Now Pakistan has also paid off $300 million in commercial loans and hoped it would also be refinanced within the next four to five days. All procedures have been completed, he added.

On the State Administration of Foreign Exchange (SAFE) deposits of $1 billion, he said, Pakistan required rollover of two deposits of $500 million each and renewal was in the order within the ongoing month. 

He said that Pakistan had to repay $3.7 billion as predicted by an international rating agency and all repayments would be done well on time. There would be no significant reduction in the foreign exchange reserves held by the SBP till the end of June 30.

On Shell Pakistan, the minister said that the company was going to sell its share to an international investor, so their business activities would not close down in the country. 

All employees would remain intact and no money would be remitted from the country. He said that Shell was making plans for separation from energy, so it was their internal decision. "There is nothing to worry about, this news is not new for the government, he added.