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Qatar announces $3.0b investment in Pakistan

June 25, 2019 00:00:00

ISLAMABAD: Cash-starved Pakistan on Monday secured another bailout package of $3.0 billion from Qatar, bringing total loans by four friendly countries to nearly $16 billion in almost one year, reports the Express Tribune.

Adviser 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 $3.0 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 $3.0 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 $2.0 billion in cash deposit, which were lower than 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 $1.0 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 $2.0 billion at around 1.0 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 14.

Pakistan has also reached a staff-level agreement with the International Monetary Fund for a $6.0 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 of 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 1.0 per cent during first 11 months of the PTI government.

During the visit of Qatari Emir, Pakistan and Qatar had also signed three memoranda of understanding (MoU). They signed an MoU on establishment of Pakistan and Qatar Joint Working Group (JWG) on trade and investment.

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