'China asked to roll over $2bn deposits', Pakistan informs IMF

• Sources say China has given verbal assurances to Pakistan.
• IMF communicated about forex reserves plans.
• Lender asked to sign SLA after implementation of tough measures.

ISLAMABAD: Pakistan has communicated to the International Monetary Fund (IMF) that Islamabad has requested China to roll over $2 billion State Administration of Foreign Exchange (SAFE) deposits by a year, reported The News on Tuesday citing sources.

“We have already made the request to the Chinese side for granting rollover of $2 billion SAFE deposits, which is going to mature by end of the ongoing month,” sources told the publication.

According to the report, the Ministry of Finance and State Bank of Pakistan (SBP) shared their external financing plan during Monday night’s virtual parleys with the Fund. Pakistan has communicated to the IMF that it plans on raising its dwindling foreign exchange reserves to the $10 billion mark by end of June.

“Under the planned schemes of things, the revival of the IMF programme will enable Islamabad to muster up the required dollar funding from all possible avenues including multilateral, bilateral and commercial financing as well as getting rollover of upcoming China’s SAFE deposits to the tune of $2 billion,” sources told The News. The total Chinese SAFE deposits stood at $4 billion and the remaining maturity would become due in a few months.

Another official told the publication that Beijing had given verbal assurances of approving the rollover of SAFE deposits of $2 billion. However, it was preferred that Beijing should announce it officially.

IMF agreement

Meanwhile, Pakistan has informed the IMF that Islamabad has implemented all the tough measures suggested by the lender and now both sides should move towards the signing of the staff-level agreement  (SLA) without wasting any further time.

However, IMF’s Resident Chief Esther Perez Ruiz was quoted by Reuters saying: “All IMF programme reviews require firm and credible assurances that there is sufficient financing to ensure that the borrowing member’s balance of payment is fully financed, over the remainder of the programme”.

Finance Minister Ishaq Dar had told reporters last week that external financing confirmation was not part of prior action of the IMF for signing of a staff-level agreement and it was agreed between the two sides that the Fund would help Islamabad secure its confirmation on external financing needs.

However, sources said that there were nine tables under the Memorandum of Economic and Financial Policies (MEFP) that require to be fulfilled with the official figures, and one of the tables was related to envisaging the Net International Reserves (NIR) as an indicative target which could not be fulfilled without incorporating the external financing needs of the programme period.