Saudi Arabia, China to boost Pakistan’s foreign reserves this month: Dar

Finance Minister Ishaq Dar on Wednesday said Saudi Arabia and China were set to reinforce Pakistan’s foreign exchange reserves much before the close of this month.

“Our foreign exchange reserves by end-June would be much better than you can think,” he told a press conference in Islamabad.

He said the IMF programme would be completed at every cost, China and Saudi Arabia would enhance their support, government-to-government disinvestments would be completed, and the current account deficit would be about $3 billion less than earlier projections.

Dar recalled that China and Saudi Arabia, during Prime Minister Shehbaz Sharif’s visits in September,  had agreed to increase their support to Pakistan, and the Saudi finance minister later confirmed this to international news agencies.

He said the process got delayed, but Saudi Arabia would increase its support much earlier than the end of this month, while the Chinese loan rollover was also being processed.

Gen Asim Munir in Saudi Arabia

The assurance about Riyadh’s support came as Chief of Army Staff Gen Asim Munir has reached Saudi Arabia as part of an official visit to the Middle East – his first foreign tour since assuming the command of Pakistan Army in late November – to boost bilateral relations and cooperation.

The announcement was made the Inter Service Public Relations (ISPR) which said the army chief would visit Saudi Arabia and the United Arab Emirates from January 4 to 10

It said Gen Asim Munir would meet senior leadership of the two countries and discuss matters of mutual interests, military-to-military cooperation and bilateral relations focusing on security-related subjects.

On Thursday, the Saudi Press Agency (SPA) reported that the army chief met Defence Minister Khalid bin Salman in Riyadh where the two discussed matters of mutual interest.

The Saudi minister congratulated Gen Asim Munir on his appointment as the new army chief. “During the meeting, they emphasised the strength and durability of bilateral relations between the two fraternal countries, and discussed military and defense cooperation, and ways to support and enhance them, in addition to discussing the most important regional and international issues of common interest,” the SPA said.

Later, Saudi Defence Minister Khalid Bin Salman also shared his picture with the visiting Pakistan army chief. “We emphasised the strategic partnership between our brotherly countries, reviewed the bilateral military and defence relations, and discussed ways of strengthening our cooperation,” he tweeted.

Taxing the rich

The finance minister also confirmed earlier media reports by making an announcement that the government would be shortly imposing flood levy on the affluent and a significant gain tax on banks’ foreign exchange earnings to ramp up revenue.

Dar repeatedly rejected the questions about the possibility of Pakistan defaulting on its foreign debt and said such speculation was being pushed by the PTI whose white paper was a pack of lies and based on selective data, misleading numbers, factually incorrect and devoid of economic context.

The minister disagreed that a threshold committed with the IMF under the eighth quarterly review for contingency budgetary measures had been crossed, as revenue collection during the first five months (July to November) of this fiscal year was above target.

However, he hastened to add that a heavy revenue ticket of Rs270-290 billion super tax pitched for December could not yield results because of stay orders, resulting in a revenue shortfall in December.

“We are in any case planning to beef up revenues and considering a flood levy and a substantial recovery on account of unprecedented foreign exchange windfalls” earned by the banking sector, but there would be no measure that adds up to the burden on common people already suffering a lot of hardship, he said.

He noted that petroleum prices had not gone up for over three months and instead dropped by Rs19-20 per litre for petrol and diesel and by Rs29-30 for kerosene and light diesel.

Responding to a question, the finance minister said many countries had imposed taxes on foreign exchange earnings and added that multiple agencies were already in action to combat the smuggling of foreign exchange and other commodities like wheat and fertilizer.

He said the privatisation transactions, particularly the sale of LNG plants and others on a government-t0-government basis, were also progressing and would be completed within six months.

Responding to a question, the minister said the IMF delay was because of the credibility gap caused by “reckless decisions” of the PTI government on the eve of the no-confidence vote, as he rejected the whitepaper published by Imran Khan-led party.

Resultantly, the IMF raised questions not only about the quarter ending December instead of the original end-October performance but also sought details about the subsequent 11th and 12th reviews (until June), particularly on how Pakistan would finance $16.3bn flood-related requirements.

“We have provided these things” and would be meeting the IMF on the occasion of a donors’ conference in Geneva on Jan 9, Dar said.


He admitted that it was a major cause of concern for the government and promised to gradually checking the trend down. Inflation and other economic indicators would be much better by June 30, said the finance minister.

Speaking on the occasion, Planning Minister Ahsan Iqbal said the major factor for higher prices of essential commodities was a total lack of support from Punjab, besides massive devaluation, PTI’s package for force energy price cuts and the global inflationary cycle.


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