Pakistan plans to get $3b from China, launch $2.5b Eurobond

ISLAMABAD: In order to shore up depleting foreign currency reserves, Pakistan plans to secure $2 to $3 billion from China as safe deposits and launching of sovereign Eurobond worth $2.5 billion for avoiding plunging into another balance of payment crisis in the next fiscal year 2018-19, The News has learnt.Sources said that Pakistan has made formal requests to China and Saudi Arabia for bailing it out and there were strong expectations that China would respond positively by granting $2 to $3 billion. When balance of payment crisis erupts in any country, the door of IMF is knocked as last resort.“We are expecting something even earlier and I cannot disclose beyond this,” a top official told The News.According to the budget 2018-19 documents, Pakistan plans to obtain over $10 billion equivalent to Rs1.118 trillion in shape of external loans and grants from all multilateral and bilateral creditors against revised estimates of Rs1.81 trillion.Pakistan’s reliance on short term commercial borrowings from banks would continue to persist in the coming fiscal year as the government would secure over $3 billion from these commercial banks in next fiscal year against revised estimates close to $4 billion in outgoing financial year.In the budget in brief for 2018-19, the government envisaged to generate $2.5 billion through Sukuk bond but in details of foreign resources estimates for 2018-19 showed that the government would generate this amount through sovereign bond. There is zero amount showed through Sukuk bond.Pakistan has projected to get around $1.6 billion from Asian Development Bank (ADB), China $900 million, commercial banks $3.5 billion, sovereign bond $2.5 billion, IBRD $200 million, IDA $700 million, Islamic Development Bank $1.1 billion and multimillion dollars from other avenues.The sources said that the government has projected current account deficit to the tune of $13 billion in the next budget and amortisation of loans would require $5 billion so the government would have to arrange financing of $18 billion in the next fiscal year.Now the disbursement of loans and grants has been projected at $10 billion and with help of sovereign bond and Chinese deposits would fetch $4 billion in the next fiscal year. The remaining $4 billion will be generated through foreign direct investment (FDI).The government has projected that remittances would fetch $21 billion in the next fiscal year 2018-19.All these projections needed to be materialised otherwise the external sector vulnerabilities would force the incoming government to go back to the IMF, the sources said.

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