ISLAMABAD: Pakistan on Monday received an assurance from Qatar for a $3 billion package consisting of a foreign currency deposit and “direct investment”, according to the adviser to the prime minister on finance.

The announcement came over the social media site Twitter, when Hafeez Shaikh tweeted “[w]ant to thank the Emir of Qatar HRH Sheikh Tamim bin Hamad Al Thani for announcing US $3 Billion in deposits and direct investments for Pakistan and for Qatar’s affirmation to further develop relations between the two countries”.

This is the fourth “friendly support” package of the sort for Pakistan and takes the combined bilateral loans during current fiscal year to more than $12.7bn before Pakistan formally enters an IMF programme early next month for $6bn financing. So far, Saudi Arabia, China and UAE have extended about $9.7bn in loans and cash deposits to Islamabad since current government came to power in August last year.

Officials at the finance ministry said it was unclear how much of the Qatari bailout would include cash dep­osit and how much of it will be in the form of investment.

Amount to be in cash deposit and investment

A senior official of the finance ministry said the Emir of Qatar concluded his 2-day visit to Islamabad only a day earlier and the concerned authorities were still deliberating to finalise details that will take some time before they are finalised. Simultaneously, it was also not clear when the Qatari inflows would arrive.

In addition, Saudi Arabia’s $3bn oil facility promised in October last year is now set to begin in July this year at the rate of $375m per month. Two federal ministers had earlier this month announced that the Asian Development Bank is also ready to provide $3.4bn to Pakistan for budgetary support but the Manila-based lending agency distanced itself from the announcement the very next day.

Saudi Arabia agreed to a Pakistani request in October last year to provide a $6bn bailout — $3bn in safe deposit of the State Bank of Pakistan and $3bn in oil supplies on credit. The $3bn cash had been transferred to the SBP account in three equal monthly instalments, but the oil facility has taken longer to be formally activated.

The United Arab Emirates also promised a similar support for Pakistan — $3bn in cash deposit and $3bn oil supplies on deferred payments. The UAE transferred $2bn in cash deposit, but stepped back from the oil facility and the final tranche of $1bn cash deposit.

Pakistan’s oil imports are estimated at about $15bn and the government is trying to arrange half of those requirements through credit facilities. The country’s oil imports during the first 10 months of the current fiscal year stood at about $11.9bn, an increase of 4pc over the same period last year.

Besides the support from Saudi Arabia and the UAE, the government has arranged about $551 million worth of oil and LNG (liquefied natural gas) supplies through the Islamic Trade Finance Corporation. Of this, about $240m worth of letters of credit have recently been opened for import of LNG.

China also extended financial support worth about $4.6bn to Pakistan during the outgoing fiscal year through commercial loans and safe deposits. China is charging about 5.5pc mark up on commercial loans and about 1pc on deposits while Saudi Arabia and UAE charge about 3.18pc interest.

Published in Dawn, June 25th, 2019