Pakistan wants China to rollover $2bn SAFE deposits

• Ishaq Dar meets Chinese envoy, seeking rollover of SAFE deposits worth $2 billion. 
• Pakistan has to secure a rollover under IMF conditions.
• US has asked Pakistan to seek debt relief from China.

ISLAMABAD: In a bid to materialise financing requirements under the IMF programme, Finance Minister Ishaq Dar has sought the support of the Chinese ambassador for securing the rollover of State Administration of Foreign Exchange (SAFE) deposits of $2 billion due in March 2023.

As per the IMF’s condition, Pakistan will have to secure a rollover of $2 billion in SAFE deposits for the current fiscal year.

The development came after US Secretary of State Antony Blinken called on Pakistan to seek debt relief from its close partner China in view of the countrywide cataclysmic floods.

Blinken made the remarks after talks in Washington with Foreign Minister Bilawal Bhutto Zardari on September 16.  

According to an official statement issued by the Ministry of Finance, Chinese ambassador Nong Rong called on Finance Minister Ishaq Dar here at the Finance Division on Friday, The News reported. 

He apprised the ambassador of the damages caused by the unprecedented floods in Pakistan affecting the infrastructure, agriculture, lives and properties and cost to the economy at large.

He also appreciated the support extended by the Chinese leadership in the refinancing of the syndicate facility of RMB 15 billion ($2.24 billion) to Pakistan and further sought the support of the ambassador in facilitating the rollover of SAFE China deposits of $2 billion in March 2023.

Forex reserves plunge

It is pertinent to mention here that in line with the dominant trend over the last several weeks, the country’s foreign exchange reserves held by the State Bank of Pakistan (SBP) once again declined by 4.07%.

On September 23, the foreign currency reserves held by the SBP were recorded at $8,005.9 million, down $341 million compared with $8,346.4 on September 16, data released by SBP showed on Thursday.

Overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $13,761.9 million.

Net reserves held by banks amounted to $5,756 million. The central bank cited external debt repayment as a major reason behind the decline.

With the current foreign exchange reserves position, Pakistan has an import cover of less than two months.

A critical level of reserves has caused severe pressure on the Pakistani rupee with the local unit becoming the worst performing currency this month.