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Sunday, February 5, 2023
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EditorialWaiting for financial gifts

Waiting for financial gifts

By the end of the following week or month, the cash-strapped government is hoping without hope that it will be able to secure $1-2 billion in contributions from a friendly nation. The finance minister, Ishaq Dar, is keeping the source secret and the precise amount of the inflows. The value of transparency in financial concerns cannot be overstated. Before the gift lands here, it is necessary for the government to set terms with the International Monetary Fund. Prime Minister Shehbaz Sharif says he spoke to the top IMF officials and emphasised his government’s determination to fulfil the requirements of the IMF programme. The phone call occurs at a time when Pakistan’s economy is becoming more agitated and its foreign exchange reserves only cover less than three weeks’ worth of imports.PM Shehbaz posted on Twitter, “In a phone discussion with Managing Director [Kristalina Georgieva] of the IMF, I told her about the government’s resolve to fulfil the requirements of IMF’s programme.”

Other than IMF, the intended gift from a friendly nation will boost our economy. We will rely on our insider sources in the power corridor and our instincts in these situations to get information. Saudi Arabia immediately comes to mind when a PML-N-led coalition government mentions funding from a friendly nation. When the coalition government, led by PML-N’s Shehbaz Sharif took office in 2022, we were informed that a friendly nation, indeed, Saudi Arabia, had given (or donated) $1.5 billion to the new administration. Earlier, in 2018, when the PML-N government took over in 2013, a similar gesture from Saudi Arabia was reported. Using this money, the administration paid the perpetual circular debt in order to boost power output. The oil-rich Saudi Arabia stands by Pakistan regardless of who rules Islamabad. Similarly, no matter who rules the kingdom, Pakistan is treated with Kindness by Riyadh. For more than 10 years, it was controlled by the ailing King Abdullah, a dependable ally of Pakistan. Through thick and thin, the nation supported Pakistan. Though everything changed with the advent of the King Salman era and now, Prince Muhammad Bin Salman, also known as MBS, is in charge of the once-unbreakable ties between the two nations weathered the test of change. For a brief period of time, ties eroded as a result of the Yemen war and Pakistan’s subsequent decision not to commit foot soldiers. Additionally, Saudi Arabia itself was going through a difficult time and its economic reforms made it difficult for the king to continue giving out such aid to other nations. But Saudi Arabia remained a friend to Pakistan when PTI’s Imran Khan was in charge, and now when coalition government’s Shehbaz Sharif is the prime minister.

Let’s extend our imagination to China, a different friendly nation. According to sources, inflows from the government-owned Chinese Bank could help Pakistan shore up its foreign exchange reserves. Pakistan has previously received loans from China  this year. Prior to this, in April, Pakistan obtained a $1 billion loan from its neighbour, which would be repaid in three years.

The situation paints a gloomy picture because of the country’s current foreign exchange reserves. Pakistan has returned loans to United Arab Emirates (UAE) banks, Emirates Bank repaid $600 million and Dubai Islamic repaid $420 million. After this, the foreign exchange reserves of the country have further decreased by 1.2 billion dollars. According to the sources of the Ministry of Finance, the foreign exchange reserves of the State Bank remained at 4.5 billion dollars. State Bank foreign exchange reserves are less than one month’s imports. Pakistan needs foreign aid for the Geneva Conference and efforts will be made to provide 1.5 billion dollars for the Geneva conference. Our exports sector saw a six percent decrease in the last nine months. Along with the probable $1-2 billion gift from an unnamed nation, the government can rely on $20 billion in strong remittances.

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