FT: Pakistan gains guarantee of China's financial backing

[PDFChamp]

Report says Beijing will lend money to 'overcome crunch on foreign payments'. PHOTO: REUTERS

KARACHI: Pakistan has been guaranteed financial backing from Beijing, senior officials said, as the incoming government of Imran Khan seeks to avoid going to the International Monetary Fund (IMF) as it resolves its foreign exchange crisis, reported the Financial Times on Monday.

Senior members of Pakistan Tehreek-e-Insaf (PTI) said they have been assured that they will get further loans from China amid depleting reserves that dropped to $9 billion before Beijing came to the rescue with a $1 billion inflow.

“China has promised to continue helping Pakistan overcome the crunch on foreign payments,” one prospective cabinet minister told the FT.

Another senior party leader said, “The Chinese have signalled their intent to keep helping Pakistan avoid a crisis, a default.” But he added that Chinese officials have urged their Pakistani counterparts “to take steps to reduce the large deficit”.

The FT report comes at a time when the PTI is set to form the federal government after winning the most number of National Assembly seats in last month’s general elections. While the political party gears up to lead Pakistan, among its immediate challenges would be to avert a balance of payments crisis.

Foreign currency reserves have dropped to alarming levels and are only sufficient to finance a month and a half of imports. The central bank has already let the rupee go, devaluing the currency in four rounds since December 2017 before the inflow of $1 billion arrested the slide. The government imposed regulatory duty, but that has not stopped the current account deficit from widening to $17.99 billion in fiscal year 2017-18.

While Pakistan usually relies on the IMF for an inflow, increasing friction with the US has prompted looking at other options. Though the IMF denies that US policy towards Pakistan would affect its chances of seeking the package, experts believe the pool of choices has to be bigger.

Earlier this month, a bipartisan group of US senators also expressed concern over potential bailout requests to the International Monetary Fund (IMF) by countries who have accepted “predatory Chinese infrastructure financing”.

In a letter addressed to Treasury Secretary Steven Mnuchin and Secretary of State Mike Pompeo, the senators asked how the Trump administration plans to address “the dangers of China’s Belt and Road Initiative (BRI)”.

The China-Pakistan Economic Corridor (CPEC) is part of the BRI and involves billions of dollars worth of infrastructure development and establishment of energy projects in Pakistan. However, the development has also involved China extending loans to Pakistan, much to the dismay of the US that feels Beijing is using “economic pressure to affect foreign policy decisions”.

“It is apparent that…the goal for the [Belt and Road Initiative] is the creation of an economic world order ultimately dominated by China,” the letter quoted US senators as saying.

https://tribune.com.pk/story/1780055/2-pakistan-gains-guarantee-chinas-financial-backing-ft/

 

[PDFChamp]

Pakistan gains guarantee of China’s financial backing

Farhan Bokhari in Islamabad and Kiran Stacey in New Delhi

PTI officials say Beijing has promised incoming government loans to avoid seeking IMF support One of Imran Khan's first tasks will be to repair the country’s balance of payments problem, with high imports and low exports having left it with only $10.4bn in foreign currency.

Pakistan has been guaranteed financial backing from Beijing, senior officials said, as the incoming government of Imran Khan looks to avoid having to go to the IMF to solve its foreign exchange crisis.

Senior members of Mr Khan’s Pakistan Tehreek-e-Insaf party have told the Financial Times they have been assured they will get further loans from Beijing over the coming months as one way to keep their currency stocks topped up.

Chinese state-backed banks have lent Pakistan more than $5bn in the past financial year as Islamabad has become increasingly reliant on its northern neighbour to secure its finances.

One prospective cabinet minister told the FT: “China has promised to continue helping Pakistan overcome the crunch on foreign payments.”

Another senior party leader said: “The Chinese have signalled their intent to keep helping Pakistan avoid a crisis, a default.” But he added that Chinese officials have urged their Pakistani counterparts “to take steps to reduce the large deficit”.

Mr Khan, Pakistan’s former cricket captain, is hoping to be sworn is as the country’s new prime minister within days following last month’s election, at which his party won the most seats. New MPs took their oaths on Monday, with the opposition Pakistan Muslim League-Nawaz and Pakistan People’s party promising to provide a unified opposition to Mr Khan’s PTI.

One of his first tasks will be to repair the country’s balance of payments problem, with high imports and low exports having left it with only $10.4bn in foreign currency, according to the latest published statistics — enough to cover two months’ worth of imports.

Officials have drawn up plans for the new government to approach the IMF for a bailout worth up to $12bn, which would be Pakistan’s 13th bailout from the fund and its largest ever.

But the US, which is the IMF’s biggest shareholder, has urged the fund not to issue a loan unless Pakistan publishes full details of the loans it has taken from China to pay for a $60bn infrastructure scheme.

With Islamabad and Beijing reluctant to reveal loan details, officials in the Pakistani government have begun to explore other sources of funding. Last week the FT revealed that the Saudi-backed Islamic Development Bank has agreed in principle to lend Pakistan more than $4bn — though this will be insufficient to avoid further assistance.

Asad Umar, Mr Khan’s proposed finance minister, told the Dawn newspaper on Monday he saw turning to the IMF as a “fallback option”, to be sought once other routes had been explored.

One finance ministry official told the FT: “Clearly, we mustn’t put all our eggs in the IMF basket. At least for the sake of argument, our future plans should also include a back-up which is built on Chinese money.”

Beijing has not told Islamabad how much it might be willing to lend, or whether it will be enough to avoid an IMF bailout. But Mr Umar told reporters last week the Chinese ambassador to Pakistan had given the incoming government “his assurance that China is a friend that Pakistan can count on”.

https://www.ft.com/content/34eedbfc-9ec1-11e8-85da-eeb7a9ce36e4

 

[Chakar The Great]

Pakistan gains guarantee of China’s financial backing

Farhan Bokhari in Islamabad and Kiran Stacey in New Delhi

PTI officials say Beijing has promised incoming government loans to avoid seeking IMF support One of Imran Khan's first tasks will be to repair the country’s balance of payments problem, with high imports and low exports having left it with only $10.4bn in foreign currency.

Pakistan has been guaranteed financial backing from Beijing, senior officials said, as the incoming government of Imran Khan looks to avoid having to go to the IMF to solve its foreign exchange crisis.

Senior members of Mr Khan’s Pakistan Tehreek-e-Insaf party have told the Financial Times they have been assured they will get further loans from Beijing over the coming months as one way to keep their currency stocks topped up.

Chinese state-backed banks have lent Pakistan more than $5bn in the past financial year as Islamabad has become increasingly reliant on its northern neighbour to secure its finances.

One prospective cabinet minister told the FT: “China has promised to continue helping Pakistan overcome the crunch on foreign payments.”

Another senior party leader said: “The Chinese have signalled their intent to keep helping Pakistan avoid a crisis, a default.” But he added that Chinese officials have urged their Pakistani counterparts “to take steps to reduce the large deficit”.

Mr Khan, Pakistan’s former cricket captain, is hoping to be sworn is as the country’s new prime minister within days following last month’s election, at which his party won the most seats. New MPs took their oaths on Monday, with the opposition Pakistan Muslim League-Nawaz and Pakistan People’s party promising to provide a unified opposition to Mr Khan’s PTI.

One of his first tasks will be to repair the country’s balance of payments problem, with high imports and low exports having left it with only $10.4bn in foreign currency, according to the latest published statistics — enough to cover two months’ worth of imports.

Officials have drawn up plans for the new government to approach the IMF for a bailout worth up to $12bn, which would be Pakistan’s 13th bailout from the fund and its largest ever.

But the US, which is the IMF’s biggest shareholder, has urged the fund not to issue a loan unless Pakistan publishes full details of the loans it has taken from China to pay for a $60bn infrastructure scheme.

With Islamabad and Beijing reluctant to reveal loan details, officials in the Pakistani government have begun to explore other sources of funding. Last week the FT revealed that the Saudi-backed Islamic Development Bank has agreed in principle to lend Pakistan more than $4bn — though this will be insufficient to avoid further assistance.

Asad Umar, Mr Khan’s proposed finance minister, told the Dawn newspaper on Monday he saw turning to the IMF as a “fallback option”, to be sought once other routes had been explored.

One finance ministry official told the FT: “Clearly, we mustn’t put all our eggs in the IMF basket. At least for the sake of argument, our future plans should also include a back-up which is built on Chinese money.”

Beijing has not told Islamabad how much it might be willing to lend, or whether it will be enough to avoid an IMF bailout. But Mr Umar told reporters last week the Chinese ambassador to Pakistan had given the incoming government “his assurance that China is a friend that Pakistan can count on”.

https://www.ft.com/content/34eedbfc-9ec1-11e8-85da-eeb7a9ce36e4

Big news, now where us Sunil and couple of more Hindu-satanis ?

They are always worried about Pakistan going Bankrupt. To all the endians out there,

 

[GeraltofRivia]

China just needs to divert some money from US Treasury bond holding to Pakistan Treasury bond. win win.

 

[Path-Finder]

 

[Clutch]

Oh my... We are doomed... Again!

 

[Hassan Psy]

Ooooooooo, so we took sooooo much if loan that to repay installement/interest alone, We need 12 B Dollars,
Do they have brains? Or they typically obsessed, US with China n India With Pakistan. Why dont they get it, CPEC is not loan but most most it is INVESTMENT, and rest the loan part, We will start paying it back by 2020-22 i i guess. In 30-35 years ,

 

[zip]

Ooooooooo, so we took sooooo much if loan that to repay installement/interest alone, We need 12 B Dollars,
Do they have brains? Or they typically obsessed, US with China n India With Pakistan. Why dont they get it, CPEC is not loan but most most it is INVESTMENT, and rest the loan part, We will start paying it back by 2020-22 i i guess. In 30-35 years ,

If it is investment or loan it should have increased your reserve right ?

 

[rambro]

The world must come together to address the dangers the US regime poses

 

[Hassan Psy]

If it is investment or loan it should have increased your reserve right ?

Well, Do u know the time frame for the completion of CPEC? First thoroughly read out about the projects, Their starting dates and their timelines, N then talk about it. One can not bashi his/her head with walls.

 

[War Thunder]

The world must come together to address the dangers the US regime poses

US regime is not a regime but a test bed for the global elite to exercise their power through, or simply test its civilians for various indoctrination methods before moving out to others.
And the so called global elite control the whole world around you, you can;t expect most of them to stand up and those who actually do end up paying the price.

It's gonna take a big *** war aka "Armageddon" to get things fixed ere mate...

 

[zip]

Well, Do u know the time frame for the completion of CPEC? First thoroughly read out about the projects, Their starting dates and their timelines, N then talk about it. One can not bashi his/her head with walls.

So you will get investment/loan in your reserve after completion of cpec right ? Can you show me even 10% of it since most of works are in progress ?