05/04/2022
ISLAMABAD:
The United Arab Emirates (UAE) has rolled over $2 billion debt for one year amid central bank’s call to arrange more loans to foreign exchange reserves that depleted by one-fourth in just two weeks.
In addition to securing the rollover, the Pakistani authorities on Monday managed a statement from the International Monetary Fund ( ) to calm the jittery markets that could further undermine the value of the rupee against the US dollar.
The has rolled over $2 billion for one more year, Finance Secretary Hamid Yaqoob Sheikh told The Express Tribune on Monday. The facility had matured last month and Pakistan had sought a three-year extension.
The outgoing prime minister, Imran Khan, had requested the $6 billion facility in November 2018 but the UAE approved $2 billion for a period of three years that became effective in early 2019. It was the second major facility that a foreign country rescheduled in past 10 days.
Yet the foreign exchange reserves remained on a sliding path despite a major relief from China and the UAE.
The Ministry spokesman said that the UAE had not yet taken a decision on the rollover of another $450 million debt that matured few weeks ago. Pakistan had not paid back the $450 million debt, although Dubai had demanded its money back.
The foreign exchange reserves that were close to $15 billion till March 18th have already slid to around $11 billion, sources said. The $4 billion or over one-fourth reduction in the reserves within no time has panicked the central bank that is now seeking urgent foreign loans, the sources added.
They said the State Bank of Pakistan ( ) and the Finance Ministry were discussing options to seek more foreign loans but had very little option in these circumstances.
The government had approached a consortium of foreign commercial banks for a $1 billion loan but the banks were demanding high interest rate, according to the sources. However, in the absence of political leadership, bureaucracy was reluctant to get the loan at higher rate, they added.
Pakistan and the IMF talks were derailed last month – for the third time in as many years -- after the outgoing Pakistan Tehreek-e-Insaf (PTI) government followed the path of fiscal indiscipline and violated its commitments given to the IMF.
source: The Express Tribune