China has given approval for the rollover of $2 billion State Administration of Foreign Exchange (SAFE) deposits for one year. Finance Minister Ishaq Dar confirmed this when asked by The News of Friday.
The rollover of Chinese SAFE deposits is one of the requirements set by the IMF for Pakistan to meet its external financing needs and move towards a staff-level agreement.
One of the nine tables under the Memorandum of Economic and Financial Policies (MEFP) is related to the Net International Reserves (NIR), which cannot be fulfilled without incorporating external financing needs until the end of June 2023.
The IMF has asked Pakistan to bridge a $6 billion gap to maintain its credibility, as failure to do so may result in default.
This condition was set due to commitments made by Gulf countries on the Executive Board for financial assistance to Pakistan in various forms, including deposits and investments.
The IMF has advised Islamabad that its credibility is at stake if it fails to materialise commitments from its bilateral partners, and the support of Saudi Arabia, the UAE, and Qatar is crucial in striking a staff-level agreement.
Only China has fulfilled its commitments to Pakistan so far, including refinancing commercial loans and rolling over SAFE deposits.