Pakistan expresses interest in possibility of currency swap with Russia

Pakistan has reportedly expressed interest in the possibility of currency swap with Russia and signing of an agreement in this regard, well informed sources told media. Islamabad conveyed its intention during the eighth session of the Pakistan-Russia Inter-Governmental Commission (IGC) on Trade, Economic, Scientific, and Technical Cooperation held on January 18-20, 2023 in Islamabad.

The sources said the two sides agreed to promote cooperation in the financial and banking sector, in particular, to work out the issue of establishing correspondent relations between credit institutions of Pakistan and Russia, as well as to consider the issue of organising settlements in national currencies in order to service foreign economic activities between residents of the two countries. The two sides expressed mutual interest in connecting Pakistani banks to the financial messaging system of the Bank of Russia for the smooth exchange of financial information.

They welcomed protocol No.2 of amendments to the Intergovernmental Agreement of October 10, 2001 and to the Protocol of February 15, 2021, which provides for the settlement of the debt of the Pakistani side to the Russian Federation, as well as the use of Russian ruble and/or Chinese yuan for servicing or repaying debt. The two sides confirmed their intention to sign it as soon as possible.

The Russian side informed the Pakistani side of the interest of the Eximbank of Russia in developing cooperation with Pakistan's banks for the purpose of organising the necessary infrastructure for settlement and financing RussiaPakistan trade flows.

Pakistani side highlighted that the Exim Bank of Pakistan looks forward to engaging with Eximbank of Russia, as well as for the exchange of information and experience. The Pakistani side expressed interest in discussing the possibility of concluding a Memorandum of Understanding (MoU). The Russian side expressed its readiness to discuss this possibility. The two sides agreed to establish working contacts for more detailed interaction in resolving the issue of cooperation. Discussing cooperation in energy sector, the both sides noted that the results of the 7th meeting of the Pakistan-Russia IGC held on 24-26 November 2021 in Yekaterinburg and Heads of State SCO bilateral meeting in Samarkand in September 2022 clearly indicate a large potential for development for efficient cooperation in energy sector including implementation of the flagship project i.e. Pakistan Stream Gas Pipeline (PSGP).

In this regard both sides agreed to finalise the project agreements for the PSGP. The open issues of Shareholders Agreement, Facilitation Agreement and other issues raised by Pakistan's Petroleum Division were discussed. The position of the parties has been understood by both sides. Pakistan side will revert to Russia side by March 2023. Both sides agreed that PSGP project will be considered in terms of a comprehensive infrastructure program which is economically viable for sustainable gas infrastructure development ensuring affordable gas supplies.

The Pakistani side will nominate a company to be responsible for crude oil and oil products deliveries to Pakistan. From Russian side the nominated State company is "operational service centre - JSC". It was recommended by the Russian side that Pakistanis side should nominate JSC from the Russian side to be part of negotiations concerning gas deliveries to Pakistan from potential markets providing JSC with necessary documents.

First, agreement on all technical specifications will be achieved, after that the oil and gas trade transactions will be structured in a way that it has mutual economic benefit for both countries. The process to be completed by March at the latest. The two sides welcomed the Digital Industrial Platform LLC and SNGPL as well as SSGC to agree to carry on a series of demonstrations/ meetings and pilot projects to assess the effectiveness of the Digital Industrial Platform solutions for the development of the Pakistani natural gas pipeline systems.