PM Imran Khan with Qatar's Emir Sheikh Tamim bin Hamad Al Thani in Islamabad on Saturday. PHOTO: PID
ISLAMABAD: The cash-starved Pakistan on Monday secured another bailout package of $3 billion from Qatar, bringing total loans by four friendly countries to nearly $16 billion in almost one year.
Advisor to Prime Minister on Finance Dr Abdul Hafeez Shaikh made the announcement through his Twitter handle.
“I want to thank the Emir of Qatar HRH Sheikh Tamim Bin Hamad Al Thani for announcing $3 billion in deposits and direct investments for Pakistan and for Qatar’s affirmation to further develop relations between the two countries”, tweeted Dr Abdul Hafeez Shaikh on Monday.
The finance ministry did not immediately provide the break-up of the $3 billion Qatar aid.
It was not clear how much of the amount was in shape of deposit that will land in the State Bank of Pakistan to provide temporary cushion to the dwindling reserves.
Qatar’s Emir ended his two-day visit to Pakistan a day earlier.
The tiny Gulf state is the fourth nation that has come forward to rescue Pakistan from default during past 11 months. Earlier, China has given $4.6 billion in shape of deposits and commercial loans and Saudi Arabia provided $3 billion cash deposit and $3.2 billion oil facility on deferred payments.
The United Arab Emirates -that is in a dispute with Qatar, also provided $2 billion cash deposit, which were lower that what it had initially promised to give to Pakistan.
The sources in the finance ministry had told The Express Tribune that the UAE withheld release of the last tranche of $1 billion after Prime Minister Imran Khan visited Qatar early this year.
The terms of the Qatari financial assistance have not been shared by the finance ministry.
Chinese have provided SAFE deposit of $2 billion at around 1 per cent interest rate and $2.6 billion at around 5.5 per cent interest rate. The Saudi and UAE loans have been received at over 3.2 per cent interest rates.
Despite these massive inflows, the official foreign currency reserves held by State Bank of Pakistan stood at only $7.6 billion as of June 14th.
Pakistan has also reached a staff-level agreement with the International Monetary Fund for a $6 billion bailout package, which is expected to be approved by the IMF Executive Board on July 3.
However, the IMF has placed a condition to get rollover the short-term loans obtained from Saudi Arabia, China and the UAE.
In addition to securing $15.6 billion from four friendly countries, the PTI government has also obtained nearly $6 billion worth of loans, from multilateral agencies, commercial banks and other bilateral sources.
The PTI government is going to make a new record of foreign borrowings in one year.
Pakistan is also required to convert its short term loans into long term borrowings aimed at improving the debt profile. It currently pays 41 per cent of its budget in debt servicing.
The successive governments’ inability to enhance exports has increased the country’s reliance on bilateral and multilateral creditors. The exports further slipped over 1 per cent during first 11 months of the PTI government.
During the visit of Qatari Emir, Pakistan and Qatar had also signed the three memoranda of understanding (MoU). They signed an MoU on the establishment of Pakistan and Qatar Joint Working Group (JWG) on trade and investment signed by Qatar Finance Minister Ali Shareef Al Emadi and Advisor on Commerce Abdul Razak Dawood.
The MoU for cooperation in the field of tourism and business events between Qatar and Pakistan signed by Secretary General of Qatar National Tourism Council Akbar Al Baker and Inter-Provincial Coordination Minister Dr Fehmida Mirza.
The MoU on the establishment of cooperation in the field of exchange of financial intelligence related to money laundering associated predicate offences and terrorism financing between Qatar’s Financial Information Unit and Pakistan’s Financial Monitoring Unit. This was signed by Head of Qatar Financial Information Unit Sheikh Ahmed bin Eid Al Thani and Acting DG Financial Monitoring Unit Muneer Ahmad.
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