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Good news: Saudi Arabia to deposit US $ 3 Billion into Pakistan's State bank

Jungibaaz

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Why doesn't Pakistan completely shun and abandon IMF as well as FATF and aligns itself permanently with China, Turkey and Russia.
I think we should unpack this issue slightly, there are two issues contained within. The first is whether we need external support (Chinese, European, American, GCC etc.), the second is whether we need to maintain cordial relations with the West. It’s an important distinction. Without complicating the question too much, you are right that IMF and FATF are being used against Pakistan as a veritable arm of US foreign policy.

Apart from China, none of the other two countries you mentioned have any substantial economic presence worth seriously leveraging even compared to let’s say Saudi Arabia, let alone the EU, let alone the US. Saudis alone hold more significance to Pakistan than Malaysia, Turkey, Russia combined.

And we are not like Russia, or Iran, etc. We have no oil or gas wealth with which to sustain an economy if we’re shut out of global markets. We have to, for our own sakes, be very pragmatic with international relations. It not only suits us, but bequeathes us to be compelled to have good relations with everyone.

Heck, even China has the most fantastic and extensive trade relations with the US and the EU (current trade war aside). These West and Eastern economic powerhouses are symbiotic, the US buys, China sells, US sells debt, China buys, and on the system goes recycling cash. I can see on my screen even now that China is the second largest holder of US Treasuries after the Fed and Japan.

As for the IMF, the day we don’t require bailouts in general, we’ll say goodbye to the IMF first, as their terms are always the harshest. They are essentially like hospitalising a patient, you want to avoid it if you can and go for less costly or physically damaging treatments. Unfortunately, we’ve had no choice. IK had ambitions about turning down the IMF, but these were ill founded and not properly considered given the very clear direction of the Pakistani economy. He also attempted to go everywhere else for money, China, Saudi, World Bank group, EU institutions, and schemes to bring overseas Pakistani cash - I’m sure it helped, but it was not enough, we went to the IMF anyway... such is our need.

As for the FATF and similar classification, we have no choice at this time but to perform whatever actions are needed to get off it (within reason, and the national interest notwithstanding). It is not enough to trade with China or Turkey, the vast majority of the world’s wealth is in the West, the vast majority of the world’s exports go there. The vast majority of international halls of power, whether that’s the UNSC, or FATF like organisations are dominated by them. We will not change this fact by our defiance of them, we’ll only succeed in making ourselves poorer and outcasts.

Think about it, what ability did China have in the 1970s to influence world affairs and power dynamics when it was poor and it had mass famines where peasants were starving to death? None.

It then built itself up within this international system, became a trade powerhouse and a major player. Now it is able to dictate a lot. It’s still not completely dominant like the US and its allies, but it took time to build this up. Conclusion: you can’t win if you lock yourself out of the game.

My two cents, Pakistan shouldn’t let ego and national mythology dictate statecraft and diplomacy. It requires the utmost pragmatism. We need to take all parties on board with us. We need to be in the confidence of the US, EU, China, GCC, our neighbours, etc.

The Saudi loans, IMF loans etc. Are all indicative of our current inability to say to stand on our own feet financially. They might be fixed (I hope), but that would not absolve us from having to maintain good relations with everyone, and stay off anyone’s bad books as much as possible e.g FATF’s bad books because we’re on the US’ bad books. The national interest itself demands it, we can’t achieve any sublime destiny if we’re constantly starving or on the brink of war.
 

VCheng

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Without complicating the question too much, you are right that IMF and FATF are being used against Pakistan as a veritable arm of US foreign policy.
Please keep in mind that Pakistan has the freedom of choice with regards to both IMF and FATF.

While it is easy to castigate these agencies for their policies, the fact remains that going to the IMF is a choice made by a sovereign nation only when it has failed to balance its books and needs a bailout. Thus, IMF is a savior of last resort, and not a villain. Don't like what the IMF prescribes? Don't go to the IMF. It can only advise acts that are according to sound financial principles to balance the books, which is the whole point of its existence for its members. Pakistan can always choose not be a member if it finds IMF such a bad character.

Similarly, FATF is charged with maintaining a set of uniforms financial transaction standards across is members that participate in the global banking system. It is up to Pakistan to decide whether to implement those standards or not. Meeting the FATF standards would give Pakistan the proper base for traceable transactions to benefit its own taxation and audit systems. And again, Pakistan can always exit FATF if it find its requirements too onerous.

So you see, any problem here is not with IMF, or FATF, or even US foreign policy.
 

Jungibaaz

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Please keep in mind that Pakistan has the freedom of choice with regards to both IMF and FATF.

While it is easy to castigate these agencies for their policies, the fact remains that going to the IMF is a choice made by a sovereign nation only when it has failed to balance its books and needs a bailout. Thus, IMF is a savior of last resort, and not a villain. Don't like what the IMF prescribes? Don't go to the IMF. It can only advise acts that are according to sound financial principles to balance the books, which is the whole point of its existence for its members. Pakistan can always choose not be a member if it finds IMF such a bad character.

Similarly, FATF is charged with maintaining a set of uniforms financial transaction standards across is members that participate in the global banking system. It is up to Pakistan to decide whether to implement those standards or not. Meeting the FATF standards would give Pakistan the proper base for traceable transactions to benefit its own taxation and audit systems. And again, Pakistan can always exit FATF if it find its requirements too onerous.

So you see, any problem here is not with IMF, or FATF, or even US foreign policy.
You’re only partially correct in this assessment, these organisations are used as extensions of foreign policy, they may have their internal mandates and stated purpose, but if that’s all you consider, the influences will allude you. And the influence doesn’t have to be nefarious, from the US taxpayers perspective, the IMF support for say Mexico in the 1990s was money well spent, it cost very little, and helps stabilise trading partners and it helps export the US’ financial and trade model.

If you know anyone who works at any NY investment bank, or Washington based Supra (World Bank, IMF, etc.), ask them why they can’t invest in Venezuela for example. Are the people there not poor or desperate enough? Or do sanctions prevent them? Ask them about their KYC arrangements even where countries like Pakistan are shareholders, let alone sole beneficiaries, how does it impact their ability to lend? But these are really nuanced, let’s look at a very obvious example.

Also, when last I checked, the US is still the largest contributor to the IMF’s finances (some USD 150bn worth), as such the US also has largest voting bloc in the IMF, which gives it the ability to veto. Congress also controls quota commitments to the IMF. The influence is plain to see, it’s not all-encompassing, but it’s also not nothing.

So yes, I agree, we need to get our house in order. The IMF is not compelled to be nice to us. I wouldn’t say that these organisations are nothing more than US stooges, they can and do exercise independent decision making. But there is a clear formal US influence. I also remember some discussions a long while ago that considered informal exertion of influence and found that to be even more significant.
 

ghazi52

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PM Imran thanks Saudi Arabia after $3-billion financial assistance

Kingdom will also help in oil payments worth $1.2 billion throughout the year


BR Web Desk
27 Oct 2021

Prime Minister Imran Khan on Wednesday thanked the Kingdom of Saudi Arabia (KSA) for providing $3 billion in support to Pakistan.

“I want to thank HRH Prince Mohammad bin Salman for supporting Pakistan with $3 billion as deposit in Pakistan's central bank and financing refined petroleum product with $1.2 billion,” tweeted the prime minister.

The prime minister said KSA has always been there for Pakistan “in our difficult times including now when the world confronts rising commodity prices.”

In a late-night development, the Saudi Fund for Development (SFD) announced the issuance of the Royal Directive to deposit an amount worth $3 billion into the central bank of Pakistan, “to help the Pakistani government support its foreign currency reserves and support it in facing the impacts of the coronavirus pandemic,” read a statement by the Saudi Press Agency (SPA).

In addition, the SFD said that the royal directive was also issued to finance the oil derivatives trade with a total amount of $1.2 billion throughout the year.

“It pointed out that these royal directives confirm the Kingdom of Saudi Arabia's ongoing stance in supporting the economy of the sisterly Republic of Pakistan,” the statement read.

The announcement came just hours after Khan returned from his three-day visit to KSA, to attend the launch of the Middle East Green Initiative (MGI) Summit held in Riyadh.

Khan visited the kingdom at the invitation of Crown Prince Mohammad bin Salman bin Abdul Aziz. Besides attending the summit, he also participated in the Pakistan-Saudi Investment Forum and met the Saudi leadership.

Federal Minister for Energy Hammad Azhar also tweeted about the financial support from KSA, saying it “will help ease pressures on our trade and forex accounts as a result of global commodities price surge.”

The financial support is a major boost to Pakistan currently in negotiations with the International Monetary Fund (IMF) to obtain a $1-billion tranche under the Extended Fund Facility (EFF).

Earlier, Business Recorder reported that an IMF condition for the successful conclusion of the ongoing sixth review talks with Pakistan authorities is the rollover of debt from friendly countries, including $1 billion from Saudi Arabia.

The report said that the presence of Advisor to Prime Minister on Finance and Revenue Shaukat Tarin in Riyadh may be seen in the context of securing the rollover of the $1-billion debt and exploring the possibility of oil on deferred payment which would reduce pressure on the balance of payment position.
 

VCheng

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So yes, I agree, we need to get our house in order. The IMF is not compelled to be nice to us. I wouldn’t say that these organisations are nothing more than US stooges, they can and do exercise independent decision making. But there is a clear formal US influence. I also remember some discussions a long while ago that considered informal exertion of influence and found that to be even more significant.
Nonetheless, Pakistan does have a decision to make in that going to these "nefarious" organizations is a matter of choice. Thus, any undue US influence is avoidable, and it is up to Pakistan to decide to do so or not. Deciding to participate in IMF/FATF and then complaining about it is simply dishonest.
 

imadul

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Beggars not choosers.
IMF, no IMF is immaterial.
Countries develop on their human capital which needs systems and fair policies.
This country is more dysfunctional then ever. Duct tape approach everywhere.

Hopeless leadership through and through.
Military keeping country afloat because they are best trained and equipped which is also a moot point as they played their role to bring us to this state of aimless stewardship.
 

Jungibaaz

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Nonetheless, Pakistan does have a decision to make in that going to these "nefarious" organizations is a matter of choice. Thus, any undue US influence is avoidable, and it is up to Pakistan to decide to do so or not. Deciding to participate in IMF/FATF and then complaining about it is simply dishonest.
FATF is there whether we like it or not, we have to in that case. Point taken on IMF. That’s up to us.

But from what I can see in the media, the US is applying pressure to get an air corridor, and that too they’re asking for carte-blanche. I’m sure it’s more than just a polite request, easily rebuked.
So the idea of Niya Pakistan is to follow the old Pakistan instead of cutting fat simply beg, borrow, rinse and repeat.:victory::victory::victory:
IK has had no choice. Can’t blame him for this path. What he can be blamed for is not seeing it coming, and making absurd promises that there was no hope of keeping.
 

VCheng

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FATF is there whether we like it or not, we have to in that case. Point taken on IMF. That’s up to us.

LOL. FATF is there, but Pakistan chose to join the APG on anti-money laundering. in 2000. FATF itself has no sanctioning authority, moreover. Pakistan is free to leave its membership at any time. It makes the choice not to do so, just as it makes the choice to go to IMF time and again. Blaming FATF for adhering to its standards is, again, dishonest.

(Pakistan also made the choice to join the Vienna, Palermo and Terrorist Financing Conventions.)
 

Jungibaaz

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LOL. FATF is there, but Pakistan chose to join the APG on anti-money laundering. in 2000. FATF itself has no sanctioning authority, moreover. Pakistan is free to leave its membership at any time. It makes the choice not to do so, just as it makes the choice to go to IMF time and again. Blaming FATF for adhering to its standards is, again, dishonest.

(Pakistan also made the choice to join the Vienna, Palermo and Terrorist Financing Conventions.)
Are you implying that the FATF wouldn’t apply judgements on countries like Pakistan if we chose not to join? And why are you claiming that we’ve joined in the first place? We are neither members nor observers. As for APG... Is North Korea a signatory of the APG? If not, the how did it end up FATF blacklisted? You’re not making valid points here. And again, no idea why you’re trying lend credibility to this by talking about the APG.

Your assertion is wrong, and the following insinuation is also wrong. Their judgement applies to us whether we choose it or not, all we can do is attempt to align ourselves with their legal and financial standards on AML/CTF. Hence my earlier comment.
 

Shotgunner51

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IMF is a UN organ and naturally wears the hat "equal for everyone", but underneath it's just another tool, shared by US and her western allies. US retains veto right and use it for geopolitical objectives, her European allies run the show and make some "conveniences" out of it, has anyone ever wondered why IMF chief is always an European, 12 in a row without exception till nowadays? And that very often IMF "funded" (though monies actually come from member states) projects ended up in European pockets? One can choose to leave these snakes, or choose to play their game and try beating them at it, but never delude oneself of enjoying "equalness"/fairness if you are not part of the west.

China began economic reform by Deng Xiaoping personally invited Nippon Steel to build the "mother of all industries", by now BaoSteel is already world-class, and this is just one out of numerous examples. The Japan + 4 Dragons model in 1960's was extended to include China from 1980's, at its peak Hong Kong alone employs 30 million jobs in one single province (Guangdong). Till nowadays inbound FDI still remains a key economic force, with Hong Kong constituting 60-70% of all, and Singapore (industrial), Taiwan (PCB, electronics), Japan (industrial) & South Korea (electronics) rounding up the top 5 seats. Even when inbound ODA was helping China in the 1980s, over 60% came from one country (Japan). These FDI/ODA are boosters, China conduct all reforms necessary from education, laws, banking to customs clearance in order to make these FDI/ODA peform. Nowadays Chinese capital, SOE or private, take the center stage. Engage the world, even the west, but don't expect help from the west.

In my opinion, in the short run Pakistan may continue to engage these so-called "multilateral" orgs like IMF, WB, with full preparation/mitigation knowing these platforms are kidnapped by the west. In the long run, joining or even constructing an "economic bloc" in which members compliment each other, could be considered as national priority. China, KSA/GCC, Turkey Indonesia/ASEAN are ideal co-development partners to begin with, and to a lesser degree Russia (due to its strategic ambiguity), Iran (also strategic ambiguity).
 
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AZADPAKISTAN2009

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While it is true Pakistan has taken IMF loan in past but from my understanding each loan was repaid back by previous government in Full

Nawaz Sharif Government took some loans start of term and by end of term they paid it back so there was no net gain or loss, however yes they did had Import/Export imbalance

  • I am curious to know what is the remaining Loan Balance Pakistan has to pay to IMF

Loan to China on other hand can be adjusted and repaid later
 

TNT

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Sorry to say but most of Pakistanis are thankless. We expect others to be thankful and call them namak haram while see how most of us talk abt saudi who been financing is since ages and multiple times.
Yes strengthen ur economy so that u dnt have to beg but untill then be thankful to those who help u. We have too many iranian chamchas in Pakistan and though iran have always damaged Pakistan.
 

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