Aid pack­ages and econ­omy

The Pak Banker - - FRONT PAGE -

Prime Min­is­ter Im­ran on Sun­day ar­rived in Abu Dhabi on a day-long visit amid re­ports that the United Arab Emi­rates is ready to ex­tend fi­nan­cial as­sis­tance to Pak­istan. Pak­istan is also likely to re­ceive the first tranche of $1 bil­lion un­der the bal­ance of pay­ments sup­port from Saudi Ara­bia within the next cou­ple of days, boost­ing the coun­try's plum­met­ing for­eign cur­rency re­serves. The money would hope­fully reach the State Bank of Pak­istan by Mon­day.

Ear­lier PM Khan's trip to China last week was aimed at se­cur­ing an emer­gency bailout on easy terms so that Pak­istan would not be forced into tak­ing a $10-12 bil­lion loan from the IMF on its hard con­di­tion. As Pak­istan's clos­est ally, China did not out­right refuse its re­quest but it ap­pears as if hopes of the Chi­nese com­ing to the res­cue were overly op­ti­mistic. Fol­low­ing the prime min­is­ter's visit to China, the sec­re­taries of com­merce, fi­nance and for­eign af­fairs and the State Bank of Pak­istan gov­er­nor all went to the Chi­nese to seek aid.

They seem to have now re­turned empty-handed. China has told Pak­istan that the best way to raise money is to in­crease ex­ports. This, of course, was the en­tire point of the ChinaPak­istan Eco­nomic Cor­ri­dor. The in­crease in Pak­istan's im­port bill ne­ces­si­tated by the pur­chase of cap­i­tal goods from China was meant to spark a mas­sive in­crease in our ex­ports. That has not hap­pened yet, largely be­cause many of the CPEC projects are not yet com­plete. Li­jian Zhao, the deputy head of mis­sion at the Chi­nese Em­bassy, has said that China will give Pak­istan a fi­nan­cial sup­port pack­age that will be big­ger than the one ex­tended by Saudi Ara­bia. Ac­cord­ing to him, com­mer­cial banks in China are in the process of set­ting up credit lines for their Pak­istani coun­ter­parts. Upon his re­turn from China, PM Im­ran Khan too had said that China had given us a "big" aid pack­age but re­fused to give any de­tails.

The prob­lem though is that Pak­istan needs the money soon as our for­eign cur­rency re­serves are dwin­dling and China ap­pears to be drag­ging its feet. Now Pak­istan is stand­ing at a junc­ture we have to strike a bal­ance be­tween IMF and China and Pak­istan should not de­pend on one source rather it should use both op­tions and aid pack­ages from Saudi Ara­bia and UAE are also ben­e­fi­cial. With more op­tions open to us, gov­ern­ment will be in bet­ter po­si­tion to make bet­ter deals oth­er­wise we have to ac­cept their terms.

Many coun­tries have used IMF pack­age and af­ter a pe­riod of five or more years these coun­tries have said good­bye to the pack­ages and they be­come able to stand on their foot but un­luck­ily in Pak­istan we hear claims at the be­gin­ning of ev­ery pack­age that it will be last but when one gov­ern­ment's term ends and new govt ar­rives we see a sorry state of af­fairs in our na­tional kitty .There­fore it is need of the hour af­ter tak­ing pack­ages PTI govt should work hard to ful­fill its eco­nomic agenda and meet its goals. It is the eco­nomic front which is key stan­dard of the suc­cess of any demo­cratic state if we fail on eco­nomic front it means we did not per­form at all.

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