Islamabad: China will provide USD 2.5 billion in loans to Pakistan to boost the foreign exchange reserves of its “all-weather ally”, a media report said Saturday.
The country’s USD 8.12 billion reserves, which are below the minimum level that the International Monetary Fund (IMF) and the World Bank (WB) prescribe, are sufficient to cover only seven weeks of imports.
Due to this, the WB and the Asian Development Bank are not providing loans for budget financing.
“Beijing will place the USD 2.5 billion in deposits with the central bank,” a top Finance Ministry official here told The Express Tribune.
With the anticipated USD 2.5 billion deposits, China’s contribution in this fiscal year alone would surge to USD 4.5 billion, the paper said.
Pakistan has struggled to maintain reserves that are not currently sufficient to provide cover to even two months of imports despite receiving USD 4 billion in loans from two Middle-Eastern countries.
In July, China deposited USD 2 billion with the State Bank of Pakistan. In the past five years, China has emerged as Pakistan’s single largest saviour in times of economic crisis.
The money is coming as part of the government’s strategy to secure breathing space till the time its macroeconomic stabilisation measures take effect.
After coming into power, Prime Minister Imran Khan visited China, Saudi Arabia and the UAE to arrange emergency loans to avoid a looming default.
Pakistan has secured USD 14.5 billion worth of commitments from these three countries that have helped largely bridged the external financing gap of the ongoing fiscal year.
Before coming into power, Khan was critical of taking loans to run the country but due to extremely low level of foreign currency reserves and financing requirements standing above USD 25 billion, he sought loans from other countries.
Saudi Arabia will provide a USD 6 billion financial assistance package, which included USD 3 billion in short term loans at an interest rate of 3.18 per cent. Riyadh has already disbursed USD 3 billion.
The State Bank of Pakistan (SBP) Governor Tariq Bajwa on Thursday said the modalities for USD 3 billion oil on deferred payments were finalised this week and an agreement would be signed on February 16 during the visit of Saudi Crown Prince Mohammad bin Salman.
The UAE has agreed to provide USD 3 billion in loans at an interest rate of around 3 per cent and has already disbursed USD 1 billion. A USD 3.2 billion worth of oil facility on deferred payment is being awaited.
Pakistan has arranged these deposits for a term of one to three years but these are likely to be rolled over, in case Islamabad faces difficulties to return them, said the sources in the Finance Ministry.
But despite USD 4 billion inflows from Riyadh and the UAE during the past two months, the gross official foreign currency reserves stayed at only USD 8.12 billion as of December 25, according the SBP governor.
However, the SBP governor on Thursday said despite these measures, the current account deficit remained high, standing at USD 8 billion in six months.
The overall foreign loans disbursements also remained low during first half of the fiscal year, standing at only USD 2.2 billion from July through December.
The government on Thursday also launched Diaspora bonds at interest rates of 6.25 per cent for three years and 6.75 per cent for five years to arrange funds for balance of payments support.
Finance Minister Asad Umar said he also gave a go ahead to launch two more financial instruments to meet external sector financing requirements. One instrument, likely to be Sukuk bonds (Islamic bonds), could be launched before June, according to the Finance Ministry officials.
The sources said the government is planning to launch foreign currency Sukuk to tap the Islamic markets. There is also a plan to launch USD 3 billion Euro bonds during the current fiscal year. Asad Umar had postponed it in November after the government arranged loans from the three countries.
The Pakistan Tehreek-e-Insaf (PTI) government blames expansionary fiscal policies of the last Pakistan Muslim League-Nawaz (PML-N) government for the overvalued exchange rate and the current external sector problems.
Since July, the rupee has been devalued by more than 15 per cent but exports could not pick.
The sources said the Finance Ministry and the central bank are in the process of implementing a flexible exchange rate regime while moving away from the managed exchange rate policy.
Sensex jumps over 250 points, rupee rises 3 paise to 71.31 against US dollar
Mumbai: The 30-share index was trading 269.24 points, or 0.76 per cent, at 35,621.85. Similarly, the 50-share NSE Nifty rose 74.40 points, or 0.70 per cent, to 10,678.75.
The Sensex had settled 145.83 points lower at 35,352.61 in the previous session, while the Nifty had fallen 36.60 points to 10,604.35.
Top gainers in the Sensex pack on Wednesday include ONGC, Vedanta, Yes Bank, Bajaj Finance, Axis Bank, Sun Pharma, L&T, Tata Steel, HDFC, Reliance and Bharti Airtel, rising up to 2.12 per cent.
On the other hand, HCL Tech, Hero MotoCorp, Bajaj Auto and M&M were the losers, falling up to 0.76 per cent.
According to traders, investor sentiment was positive on strong buying by domestic institutional investors (DIIs).
How India responded to Imran Khan’s ‘will retaliate’ speech on Pulwama
On a net basis, DIIs were net buyers to the tune of Rs 1,163.85 crore, while foreign institutional investors sold shares worth a net of Rs 813.76 crore on Tuesday, provisional data available with BSE showed.
Investors also took cues from other Asian equities that were trading positive on hopes of a resolution to US-China trade tiff.
US President Donald Trump Tuesday said that negotiations with China on a trade deal were going very well, but refrained from committing any extension of the March 1 deadline to arrive at such an understanding. Global markets are also eyeing minutes from the US Federal Reserve, scheduled for release later in the day, for clues on key interest rates, traders said.
Elsewhere in Asia, Hong Kong’s Hang Seng was up 0.50 per cent, Kospi jumped 1.17 per cent, and Japan’s Nikkei gained 0.70 per cent; while Shanghai Composite Index slipped 0.15 per cent in earlytrade.
On Wall Street, Dow Jones Industrial Average ended almost flat at 25,891.32 points on Tuesday. The benchmark Brent crude futures rose 0.08 per cent to USD 66.50 per barrel.
The rupee inched up 3 paise to 71.31 against the US dollar in early trade Wednesday even as foreign fund outflows continued amid firming oil prices.
At the Interbank Foreign Exchange (forex) market, the domestic unit opened strong at 71.29 but gave up the gains to trade at 71.31. The rupee had closed at 71.34 versus the greenback Monday. Money markets were closed Tuesday on account of Chhatrapati Shivaji Jayanti.
Foreign institutional investors (FIIs) remained in sell-off mode, offloading shares worth a net Rs 813.76 crore Tuesday, while domestic institutional investors (DIIs) bought equities to the tune of Rs 1,163.85 crore, provisional data showed.
Brent crude futures, the global oil benchmark, was trading 0.14 per cent higher at USD 66.54 per barrel.
Reliance Group stocks under pressure; tank up to 10.3% on SC move
New Delhi: Shares of Reliance Group companies tumbled up to 10.3 per cent Wednesday after the Supreme Court held RCom chairman Anil Ambani guilty of contempt of court for willfully violating its order and not paying Rs 550 crore dues to telecom equipment maker Ericsson.
Reliance Capital tumbled 10.26 per cent, Reliance Communications tanked 9.46 per cent, Reliance Infrastructure 8.75 per cent, Reliance Power 5.52 per cent and Reliance Home Finance 5 per cent on BSE.
The Supreme Court on Wednesday held RCom chairman Anil Ambani and two others guilty of contempt of court for violating its order by not paying dues of Rs 550 crore to Ericsson, and said they faced a three-month jail term if Rs 453 crore was not paid to Ericsson in four weeks.
The apex court said Ambani and the others will have to purge contempt by paying Rs 453 crore to Ericsson in four weeks.
Sops for all in Gujarat’s Interim Budget, focus on fishermen, farmers
Gandhinagar: After presenting a surplus budget of 12,241 crore in the Assembly, Deputy Chief Minister Nitin Patel said that perks announced for various communities in the Interim Budget were part of the existing schemes of the government. He also said that he decided not to increase tax because of the jump in the state’s “own tax income”that shot up by over 11 per cent in 2017-18.
“We have increased allowances provided for various schemes that are already operational… New schemes or items can also be introduced while presenting a full budget. Whatever we have done here — for instance, widow pension, allowances of aanganwadi workers — are all part of the current schemes,” Patel, who holds the Finance portfolio, told mediapersons after presenting the budget in the House.
Sops for all in Gujarat’s Interim Budget, focus on fishermen, farmers
Finance Department officials said that of the total provisions made in the Interim Budget of Rs 1,91,817 crore, the government plans to spend Rs 63,939 crore in the four months, between April and July, 2019.
“The House will be able to discuss the demand for the whole year when the modified budget will be presented,” Patel said, indicating that Assembly will hold a special session after the Lok Sabha elections.
With an eye on the Koli community votes, the BJP government increased the VAT (Value Added Tax) subsidy in diesel, used in fishing boats, by Rs 3. This is expected to benefit nearly 10,600 boatmen in the state.
The government also doubled the daily livelihood allowance — from Rs 150 to Rs 300 — provided to the families of fishermen held captive in jails of Pakistan. At present, there are about 503 Indian fishermen in Pakistani custody, as per the figures shared in Lok Sabha in February 2019. Most of them are from Gujarat. The government has also decided to allot an additional 5,000 hectares of land to encourage prawn culture in the state. This land is in addition to the 7,500 hectares and will generate employment of 25,000 aqua-culturalists, said Patel in his budget speech. The government also announced setting up new fish landing centres in Valsad which has a population of 23,000 fishermen.
Explained: Govt’s attempt to keep everyone happy ahead of Lok Sabha polls
While the government did not announce any farm-loan waiver as demanded by the Opposition Congress, it announced to set up a Rs 500 crore “revolving fund” to provide crop loans at zero percent interest to farmers in the state.
Patel, however, reiterated on the floor of the House that his government will waive of Rs 691 crore of outstanding dues of 6.74 lakh farmers, poor and medium class power consumers under a one-time waiver scheme.
“The state government has decided to waive of principal and interest and penalty amount of electricity bills of all eligible domestic power connections of BPL consumers of urban areas, all agricultural power connections, power connections of all residences of rural areas, commercial power connections of small traders of rural areas,” the Deputy CM said.
Talking about the vote on account presented by the state government, Patel said, “This year, the Union Government has presented a vote on account. Therefore it is befitting that the state’s economic approach is shaped in accordance with the policies of Union of India. We have accordingly decided to present and seek vote on account for the period of four months, ie up to July 31, 2019.”
Chief Minister Vijay Rupani termed the Interim Budget “progressive and sensitive”. “This vote-on-account has been prepared and presented keeping in mind the well-being of all sections of society, be it backward communities, tribals, Dalits, youth, women and minorities. This is a progressive and sensitive budget which takes care of even the last man in the last line,” Rupani said.
Listing the schemes, he said, “This vote-on-account reflects our sensitiveness, transparency, progressiveness and decisive approach. There is something for everyone in this,” the CM said.
Why PM silent on Kashmiri students being targeted: Omar
Srinagar, February 21: NC leader Omar Abdullah on Thursday said why was the Prime Minister silent on Kashmiri students being...
India ‘to choke’ Pakistan’s water supply in light of Pulwama: Nitin Gadkari
New Delhi: Union Minister Nitin Gadkari, on Thursday, threatened that India would ‘choke’ the water supply to Pakistan in light...
Attack on Kashmiris: Lal Chowk, adjacent areas to remain shut from Friday afternoon
Srinagar, February 21 : The Valley traders Thursday decided to observe complete shutdown in Lal Chowk and adjoining areas from...
Guzlar Dar takes charge as Dir Information
Srinagar, Feb 21 : Gulzar Ahmad Dar Thursday assumed office as Director Information and PR relieving Tariq Ahmad Zargar of...
CRPF, other forces can now take commercial flights to Kashmir: Centre
New Delhi, February 21: Troops of the CRPF and other paramilitary forces deployed in the Kashmir Valley will now be...
IVR Institute takes action against 3 Kashmiri girls for ‘adverse remarks’ against Army
Bareilly (UP), February 21: The Indian Veterinary Research Institute (IVRI) here has taken action against three Kashmiri girls for allegedly...
5 held for assault on Kashmiri trader in West Bengal
Kolkata, Feb 21: Five persons have been arrested for assaulting a Kashmiri shawl trader in West Bengal’s Nadia district, police...
69 killed as massive fire breaks out in chemical warehouses in Bangladesh capital
Dhaka: At least 69 people were killed as a massive fire ripped through several buildings also used as chemical and...
SC to hear tomorrow plea for protection of Kashmiris from threats after Pulwama Attack
New Delhi: The Supreme Court has agreed to hear on Friday a PIL seeking a direction to authorities to protect...
We want Kashmir, But Not Kashmiris: Chidambaram points out the ‘Depressing Irony’
New Delhi: Some people want Kashmir to be part of India but don’t want Kashmiris to be part of Indians,...
Fresh snowfall, landslides shut Srinagar-Jammu highway
Srinagar: Fresh snowfall in the Banihal area and multiple landslides in the Ramsoo-Ramban sector blocked the Jammu-Srinagar highway, prompting halt...