- Dar says UAE deposits remain; longer talks ongoing.
- Official says no UAE written assurance yet.
- External plan targets $12bn rollovers this fiscal year.
ISLAMABAD: The International Monetary Fund (IMF) has expressed concern that Pakistan has yet to secure a one-year rollover for $2 billion in UAE deposits, despite the central bank’s assurances to the visiting mission that a short-term arrangement is in place and talks for a longer-term rollover are underway, The News reported.
Finance Minister Muhammad Aurangzeb, however, told reporters after attending the National Assembly Standing Committee on Finance that there was no issue with the rollover.
“I categorically state that there is no issue in rollover whatsoever,” he said, adding, “There should be no problem for us, but why is the media raising it as a problem?”
The visiting IMF review mission arrived on Wednesday, whereby one of the visiting team members held parleys with the State Bank of Pakistan (SBP) high-ups and raised concerns over not securing a one-year rollover from the UAE.
Sources said the IMF might prefer to hold a meeting with the UAE ambassador to get fresh assurances on the rollover when the whole mission arrives in Islamabad next week. The IMF review mission will stay in Islamabad till March 11.
On the other hand, Deputy Prime Minister/Foreign Minister Ishaq Dar told journalists after addressing the Pakistan Governance Forum (PGF) organised by the Ministry of Planning that the UAE did not withdraw its deposit and talks for rollover for a longer period were underway.
However, requesting anonymity, a senior government official said the situation had become critical, as Pakistan had yet to receive a written assurance from the UAE.
He said the government had earlier secured a temporary two-month rollover and was now renegotiating the terms. He said the evolving situation would have to be clearly reflected in the ongoing review with the IMF.
During technical-level talks between the IMF mission and SBP officials, discussions were held on the foreign exchange reserves, monetary policy, exchange rate management, anti-terror financing and anti-money laundering measures, as well as banking regulations.
The IMF delegation is scheduled to continue discussions with the central bank officials in Karachi for two more days.
During the introductory session, the SBP governor and senior management informed the IMF team that Pakistan had recorded a current account surplus of $121 million in January, compared to a deficit of$393 million in January last year.
However, in the first seven months of the current fiscal year, the current account posted a deficit of $1.74 billion, compared to a surplus of $564 million in the same period of the previous fiscal year, indicating renewed pressure on the external account.
Officials briefed the IMF that a total of $3 billion in deposits from the UAE were currently parked with the State Bank. Two $1 billion deposits matured on January 17 and January 23 and were initially rolled over for one month, with their extended maturity now expiring on February 16 and February 23, followed by a further temporary extension till April 16 and April 23. The third $1 billion tranche is expected to be rolled over closer to its maturity date.
Pakistan may have to pay an interest rate of over 6.5% on the UAE safe deposits. The Prime Minister’s Office and the Ministry of Finance are engaged with the UAE authorities to secure a longer-term rollover arrangement.
During a briefing on the external financing plan, the IMF delegation was also informed that the Saudi Development Fund had extended the maturity of its $3 billion deposit by another year in December.
Under the financing plan, Pakistan aims to roll over a total of $12 billion in external deposits during the current fiscal year, including $9 billion from Saudi Arabia and China, along with $3 billion from the UAE.
The IMF mission is scheduled to hold a meeting with the Pakistan Business Council (PBC) and Overseas International Chambers of Commerce & Industries (OICCI) during its stay in Karachi. The mission will kick-start parleys with the finance minister Monday morning.
