ISLAMABAD: Minister for Finance and Revenue Miftah Ismail on Friday said that State Bank of Pakistan has received US$2.3 billion from China, saying this amount will help shore up the fast depleting forex reserves.
“I am pleased to announce that Chinese consortium loan of RMB 15 billion (roughly $2.3 billion) has been credited into SBP account today, increasing our foreign exchange reserves,” he said in a tweet.
The development came two days after China signed a $2.3 billion commercial loan deal with Pakistan, as the government waits for the rollover of three more maturing loans totalling $2 billion.
The official foreign exchange reserves stood in single digits at $8.24 billion. However, these loans will give it a boost, opening blocked financing pipelines.
Pakistan had repaid the $2.3 billion commercial loan in March in the hope to get it back in April. However, China had placed a condition that the money could not be used due to weakening of the external sector position of Pakistan.
China also wanted Pakistan to remain committed to the International Monetary Fund (IMF) loan programme.
On Tuesday, the finance minister had announced a deal with the IMF on budget numbers, aligning the figures with the global lender’s assessments of revenues and expenditures for the next fiscal year.
The government has also accepted some of the tough conditions for the sake of reaching a deal with the IMF.
The global lender’s Resident Representative Esther Perez said on Wednesday in a brief statement that “discussions between the IMF staff and the authorities on policies to strengthen macroeconomic stability in the coming year continue, and important progress has been made over the fiscal year 2022-23 budget”.
However, finance ministry officials said that the understanding reached with the IMF on the budget would help complete the legislation process before the end of the ongoing fiscal year on next Thursday.
In March 2019, the China Development Bank had extended a commercial loan for three years at a six-month China Shanghai Interbank Offered Rate (SHIBOR) plus 2.5%.
Earlier, wrapping up debate on budget in the National Assembly, Miftah said that the fixed tax will be collected through electricity bills.
There are 30,000 gold shops in the country and out of these only 22 are registered, claimed Miftah.
We have reduced the tax on those selling gold in shops from 4 per cent to 1%, he said.
Talking about the super tax imposed by the government on ‘big industries’, the minister said, the new tax regime would increase the tax burden of companies owned by the PM’s sons too. “My company’s tax burden will also increase by around Rs200 million,” said Miftah.
The government will tax the income not expenditures, he said. The minister said that some of the recommendations made by the legislators have been added in the budget.
Pakistan has never seen such a farmer-friendly budget, he said adding that Pakistan will be self-sufficient in edible oil and wheat, he said.
We are no longer going towards default, we will progress, the minister said.
Taking a jibe at the former prime minister Imran Khan, Miftah said Imran Khan talks about self-sufficiency after taking foreign loans. He claimed that the former PM took the country on the brink of bankruptcy.
We saved the country from going default, he added. Credit should go to me and the prime minister for that, he said.
4M APPLIED FOR PM SASTA PETROL SCHEME
Finance Minister Miftah Ismail said around four million people have applied for PM’s Sasta Petrol, Diesel subsidy scheme. Out of these, one million have already been registered, he said. There are eight million more registered under the BISP.
The Finance minister said that the current fiscal budget will be remembered for its historic deficit. Rs53 billion is deficit for the fiscal year 2021-22, he said. We had to take loans to compensate the deficit, he said.
Imran Khan’s government was giving Rs120 billion subsidy on petroleum products. Current account deficit for the fiscal year 2021-22 will be $17b.
It was necessary to restart the IMF program to save the country from going default, he added.
