China comes to our rescue in a big way

ISLAMABAD: China has agreed to roll over $2.3 billion loan to Pakistan and, significantly from the perspective of strengthening the $9.2 billion foreign exchange reserves (as on 3 June), to extend additional assistance of between $2.5 to $2.8 billion.

Highly-placed sources told Business Recorder that the recent visit of Chief of Army Staff General Qamar Javed Bajwa was a resounding success in procuring a highly valuable package. Sources further revealed that the three services’ team is still in Beijing and negotiations on the economic package are ongoing at present with possibly two phases of assistance; in the first (initial) phase $2.3 billion would be rolled over, a key International Monetary Fund (IMF) loan condition, and in the second phase another $ 2.5 to $2.8 billion would be disbursed, scheduled for November or early December.

Besides these two packages, China has also agreed to extend military aid, and to revive the strategic partnership between the two countries with the objective of raising it to the next level of cooperation in various fields under the China-Pakistan Economic Corridor (CPEC).

Asked about the terms and conditions of the Chinese economic package, the source maintained that the loans will be at concessional rates but the Chinese side reportedly emphasised the criticality of avoidance of any political disruption, underscoring the need for ensuring that all contractual obligations with the Chinese companies are met. The Chinese side also highlighted the need for reinvigorating projects rejected by the previous government.

“The Chinese leadership has assured Pakistan of Beijing’s continued support at this difficult time, besides pledging a more proactive role to support the country’s economy through the CPEC,” the source added.

A high-powered military delegation comprising senior military officials from all three services led by Army Chief Qamar Javed Bajwa visited China from June 9 to 12 to attend the meeting of Pakistan China Joint Military Cooperation Committee (PCJMCC).

According to a statement issued by the military’s media wing, Inter-Services Public Relations (ISPR), the senior level tri-service military delegation held wide-ranging discussions with senior officials of Chinese military and other government departments. The meeting was held on 12 June with the Pakistani side led by Chief of Army Staff General Qamar Javed Bajwa and the Chinese side led by General Zhang Youxia, Vice Chairman Central Military Commission of China.

It stated that both sides discussed their perspectives on international and regional security situation, and expressed satisfaction on defence cooperation between the two countries.

“Pakistan and China reaffirmed their strategic partnership in challenging times and agreed to continue regular exchange of perspectives on issues of mutual interest. Both sides also vowed to enhance their training, technology and counterterrorism cooperation at tri service level,” it added.

The sources further noted that Saudi Arabia has also pledged rollover of $3 billion assistance, contingent on success of the seventh review, during Shehbaz Sharif’s visit to Saudi Arabia on 28 April and reports indicate that the Saudi government further pledged additional assistance including the deferred oil payment facility.

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Reports also indicate that the Saudis urged the UAE to support Pakistan’s beleaguered economy and fruitful discussions were held on this account on Eid day during the visit of a high-level UAE delegation to Pakistan.

Negotiations are also reportedly at an advanced stage with Qatar for procuring liquefied natural gas (LNG) on deferred payment.

Pakistan is also hopeful, after the good optics between foreign minister Bilawal Bhutto Zardari and Antony Blinken, US Secretary of State in New York, on the sidelines of the Climate Change conference, that Washington may at best lend support to get Pakistan out of the Financial Action Task Force (FATF) grey list or, at the least, withdraw all objections.

Pakistan’s case will be heard by the FATF in Berlin, Germany, from June 15 (today) to 17, 2022 and Minister of State for Foreign Affairs Hina Rabbani Khar is leading the Pakistani side at the FATF moot. “We’ve worked hard on the 27-point action plan given by the FATF and we are quite hopeful that Pakistan will be excluded from the grey list,” another official dealing with the FATF action plan told Business Recorder.

“All these packages from friendly countries would help Pakistan boost its foreign reserves and create fiscal space which may give a breathing space to the country’s economy,” said Dr. Ashfaque Hassan, a former adviser to the finance ministry.

Business Recorder, 2022