Pakistan aims to rollover $12 billion debt from key allies and negotiate new financing from China to address its external financing gap, as disclosed by Finance Ministry insiders.

Pakistan has decided to seek a rollover of approximately $12 billion in debt from key allies like China in the upcoming fiscal year of 2024-25 to bridge a significant $23 billion gap in its external financing. The aim is to meet budget targets before the anticipated arrival of an International Monetary Fund (IMF) team to address the country’s financial challenges.

Finance Ministry insiders disclosed that Pakistan plans to rollover $5 billion from Saudi Arabia, $3 billion from the UAE, and $4 billion from China. Additionally, the estimated budget for the next fiscal year includes new financing from China, with negotiations expected to commence in mid-May ahead of the budget presentation in June.

The federal government aims to achieve budget targets prior to the IMF review mission’s arrival, instructing ministries to complete set targets before negotiations on the new loan program. The details will be provided to the IMF delegation once these targets are met. Furthermore, the budget strategy paper is set to be approved by the federal cabinet before the IMF review mission’s visit.

The Finance Ministry has initiated preparations for the budget, outlining targets for debt repayment, defense budget, and tax collections. Additionally, development and ongoing budget targets will be determined as part of the budget preparation process.

Pakistan has long grappled with meeting its external liabilities, relying on remittances, export proceeds, and foreign loans. However, exports have not kept pace with imports, and avenues for foreign aid have diminished, straining the economy and essential imports. Last year, Pakistan narrowly avoided default through a short-term loan agreement with the IMF, providing $3 billion over nine months. Now, the country seeks a fresh loan to address its economic challenges.

Remittances from Pakistani workers abroad have been a significant source of support, with the country receiving the second-highest remittances of the ongoing fiscal year at $2.8 billion in April 2024. According to the State Bank of Pakistan, remittances increased by 3.5 percent to $23.8 billion in the first 10 months of FY24 compared to the same period last year. Remittance inflows in April 2024 were primarily from Saudi Arabia, the United Arab Emirates, the United Kingdom, and the United States. These remittances peaked near $3 billion in March 2024, marking a 23-month high.

Separately, Pakistan is engaging with Chinese leadership to revive over 1800-megawatt hydropower projects and attract investment from new Chinese companies in the transmission and distribution network as part of the second phase of the China-Pakistan Economic Corridor (CPEC). A high-level delegation led by Planning Minister Ahsan Iqbal is currently in China to pursue existing investors and financial institutions and tap into more firms in the transmission and distribution network.

In his meeting, Iqbal sought China’s continued cooperation in the early implementation of hydropower projects. Both sides agreed to hold the next round of the Joint Working Group meeting on Energy soon.

In summary, Pakistan’s efforts to address its financial challenges involve seeking debt rollovers, securing new financing, and leveraging remittances from overseas workers. Additionally, the country is pursuing collaboration with China to advance key infrastructure projects under the CPEC. These measures aim to stabilize Pakistan’s economy and pave the way for sustainable growth.

Pakistan’s financial landscape reflects a complex interplay of domestic and international factors, where strategic alliances, economic policies, and global partnerships intersect to shape the nation’s economic trajectory. Amidst the ongoing challenges, the country’s leadership remains focused on addressing fiscal deficits, meeting external financing requirements, and fostering economic resilience.

The decision to seek a rollover of debt from key allies like China underscores Pakistan’s efforts to navigate its external financing gap and stabilize its economy. By engaging with strategic partners, Pakistan aims to alleviate immediate financial pressures and create a conducive environment for sustainable growth. The reliance on debt rollovers reflects the intricacies of managing external liabilities while balancing fiscal obligations and developmental priorities.

At the heart of Pakistan’s financial strategy lies the imperative to achieve budget targets and address structural imbalances before the anticipated arrival of an IMF team. The proactive approach adopted by the federal government underscores a commitment to fiscal prudence and proactive economic management. By setting clear targets and mobilizing resources, Pakistan aims to strengthen its financial position and bolster investor confidence.

The forthcoming negotiations with the IMF represent a critical juncture in Pakistan’s economic trajectory, offering an opportunity to realign policies, implement reforms, and chart a path towards sustainable development. The willingness to engage constructively with international financial institutions reflects a recognition of the importance of external support in addressing economic challenges and unlocking growth potential.

Against the backdrop of economic reforms and financial restructuring, Pakistan’s reliance on remittances emerges as a crucial lifeline, providing vital support to the economy amidst external pressures. The resilience of remittance inflows underscores the resilience of Pakistan’s diaspora community and their enduring commitment to the country’s development. By harnessing the potential of remittances, Pakistan can diversify its funding sources, reduce dependency on external loans, and promote inclusive growth.

The engagement with China under the auspices of the China-Pakistan Economic Corridor (CPEC) represents a cornerstone of Pakistan’s economic agenda, offering a transformative vision for infrastructure development, energy security, and regional connectivity. The revival of hydropower projects and investment in transmission and distribution networks signal a renewed commitment to advancing strategic initiatives that stimulate growth, create employment opportunities, and enhance energy access. The ongoing dialogue with Chinese leadership underscores the depth of the bilateral partnership and the mutual commitment to realizing shared objectives. By leveraging China’s expertise, resources, and technology, Pakistan can accelerate the pace of infrastructure development and unlock the full potential of the CPEC. The collaboration between the two countries exemplifies the principles of South-South cooperation and the potential for mutually beneficial partnerships in driving sustainable development.

As Pakistan navigates the complex terrain of economic reform and restructuring, the imperative of inclusive growth and social development remains paramount. The commitment to inclusive policies, poverty alleviation, and social protection underscores a holistic approach to economic governance that prioritizes the well-being of all citizens. By investing in human capital, social infrastructure, and equitable opportunities, Pakistan can lay the foundation for long-term prosperity and resilience.

In a nutshell, Pakistan’s economic journey reflects a multifaceted tapestry of challenges, opportunities, and strategic imperatives. By embracing a proactive approach to fiscal management, engaging constructively with international partners, and harnessing the potential of remittances and strategic alliances, Pakistan can chart a course towards sustainable development and prosperity. The path ahead may be fraught with obstacles, but with resilience, determination, and strategic vision, Pakistan can overcome challenges and realize its full potential on the global stage.

India and Nigeria have decided to finalize a local currency settlement system agreement soon and have identified several areas of focus for economic cooperation, including digital economy and digital public infrastructure, crude oil and natural gas, and pharmaceuticals. These decisions follow the 2nd session of the India-Nigeria Joint Trade Committee held in Abuja on Thursday.

Nigeria is India’s 2nd largest trading partner in the Africa region. Bilateral trade between India and Nigeria stood at USD 11.8 billion in 2022-23. However, in 2023-24, bilateral trade declined to 7.89 billion. With a total investment of USD 27 billion, approximately 135 Indian companies are actively engaged in Nigeria’s vibrant market. These investments span diverse sectors, including infrastructure, manufacturing, consumer goods, and services.

A seven-member delegation from India led by Additional Secretary, Department of Commerce, Ministry of Commerce and Industry Amardeep Singh Bhatia, accompanied by High Commissioner of India to Nigeria G Balasubramanian and Economic Adviser, Department of Commerce Priya P. Nair, held a Joint Trade Committee (JTC) meeting with their Nigerian counterparts in Abuja from 29-30 April 2024. The JTC was co-chaired by Permanent Secretary, Federal Ministry of Industry, Trade and Investment, Nigeria, Ambassador Nura Abba Rimi, and Additional Secretary, Department of Commerce.

In a comprehensive dialogue, both sides undertook a detailed review of recent developments in bilateral trade and investment ties and acknowledged the vast untapped potential for further expansion. To this effect, both sides identified several areas of focus for enhancing both bilateral trade as well as mutually beneficial investments. These areas include resolving market access issues, cooperation in key sectors such as crude oil and natural gas, pharmaceuticals, unified payments interface, local currency settlement system, power sector and renewable energy, agriculture and food processing, education, transport, railway, aviation, MSME development, etc.

The official delegation from India included officials from the Reserve Bank of India (RBI), EXIM Bank of India, and National Payments Corporation of India (NPCI). The officials from both sides actively engaged in the proceedings of the JTC, showing an enthusiastic response towards greater cooperation, addressing pending issues, boosting trade and investment, and fostering greater people-to-people contacts.

In a concerted effort to bolster bilateral trade, both sides committed to expeditiously address all issues impeding bilateral trade and facilitate trade promotion between the two nations. A business delegation led by CII (Confederation of Indian Industry) also accompanied the official delegation, comprising representatives from various sectors like power, fintech, telecommunications, electrical machinery, pharmaceuticals, etc.

The deliberations of the 2nd Session of the India-Nigeria JTC were cordial and forward-looking, indicative of the amicable and special relations between the two countries.

India and New Zealand are set to deepen collaboration in pharma, agriculture, and food processing industries, and enhance services sector trade after a delegation led by Commerce Secretary Sunil Barthwal held a number of constructive and outcome-oriented meetings in New Zealand to work on ways to deepen the existing bilateral relations, the Commerce Ministry said on Friday.

Following a series of these consultations with the Minister for Trade of New Zealand Todd McClay, Acting Chief Executive and Secretary of Foreign Affairs and Trade of New Zealand Brook Barrington, the India-New Zealand Business Council (INZBC) and the 11th India-New Zealand Joint Trade Committee, both sides acknowledged the existing huge potential in both economies and mutual trade complementarities as well as the scope to increase the trade and people to people contacts.

The meetings addressed bilateral trade matters of mutual interest, including issues related to market access, non-tariff barriers (NTBs), and sanitary and phytosanitary (SPS) measures on products like grapes, okra, and mangoes, mutual recognition arrangement (MRA) in organic products, simplified homologation including through mutual recognition of comparable domestic standards for vehicles, etc. Both parties reaffirmed their commitment to resolve these issues through constructive dialogue and cooperation under the existing mechanism of the JTC.

Among the focused discussions on several key areas aimed at promoting bilateral trade and cooperation, were progress on market access issues, economic cooperation projects, and explored opportunities for new initiatives. Both sides discussed the establishment of robust bilateral economic dialogue architecture and the creation of working groups on sectors like agriculture, food processing, storage and transportation, forestry, and pharmaceuticals to facilitate ongoing collaboration on key trade and economic issues.

Services sector and enhancing its scale for bilateral trade was given special focus during the discussions held at various levels which revealed great interest from both sides for increasing business to business as well as people to people contacts and to work on the skill gaps and how the same can be strengthened through capacity building and improving the ease of mobility. It touched upon areas such as hospitality sector including adventure tourism, nursing, telemedicine, education, air connectivity, Joint R&D (wherever feasible), startups, etc.

Collaboration in the area of pharmaceuticals and medical devices sector was discussed at length, including the adoption of fast-tracking of regulatory processes and quality assessment of manufacturing facilities using, as appropriate, the inspection reports of comparable overseas regulators. Greater sourcing of medicines from India and cooperation in the medical device sector was also discussed.

Both parties briefly explored opportunities for collaboration in digital trade, meeting nationally determined contributions, cross-border payment systems, among others. The discussions also included cooperation in the horticulture sector, including cooperation in the kiwi fruit sector (quality and productivity, proper storage in pack houses and their suitable transportation), as well as the dairy sector. Once working groups are established, India and New Zealand will review the progress made by those working groups and the recommendations thereof at regular intervals.

During the 12th Foreign Office Consultations (FOC) held in Hague on Thursday, India and the Netherlands resolved to enhance bilateral relations by emphasizing on advancements in new technologies such as semiconductors and green hydrogen. Both parties acknowledged the significant progress across all sectors and deliberated on future endeavors in key areas including Water, Agriculture and Health (WAH agenda), Science & Technology, and High-tech and Innovation, as stated by the Ministry of External Affairs (MEA) in a press release.

For the meeting, the Indian delegation was led by Pavan Kapoor, Secretary (West), Ministry of External Affairs while the Netherlands delegation was led by Paul Hujits, Netherlands Secretary General, Ministry of Foreign Affairs. In a post on X, Dutch Ministry of Foreign Affairs stated, “Secretary General Paul Huijts was pleased to welcome @AmbKapoor, Secretary West @IndianDiplomacy, to The Hague for bilateral consultations. A valuable exchange on ways to further strengthen our cooperation, bilaterally as well as on global issues of concern to both our countries.”

In a press release, MEA stated, “The FOC provided an opportunity to review progress in bilateral relations and discuss future agenda of cooperation. Both sides welcomed the excellent progress in all areas and deliberated on the way forward in priority sectors of Water, Agriculture & Health (WAH agenda), Science & Technology, and High-tech & Innovation.” “They underscored their interest to raise the level of ambition and agreed to further strengthen bilateral relations, by focusing on new emerging technologies like semiconductors and green hydrogen,” it added.

During the meeting, the officials of India and Nigeria appreciated the robust and fast-growing economic ties and noted the importance of holding the inaugural meeting of the Fast Track Mechanism for Indian companies in the Netherlands as an important step towards further enhancing B2B relations, according to the press release.

Furthermore, the two sides appreciated the presence of a large Indian community in the Netherlands, which forms an important connection and is contributing positively to the local economy and expanding cultural ties. The officials also held talks on regional and global issues of mutual interest.

Indian Oil Corp. has resumed purchasing Russian crude oil transported by a Sovcomflot PJSC tanker this week, indicating a potential restoration of oil trade between the two countries after disruptions caused by tightened US sanctions. The Suezmax tanker Vladimir Tikhonov unloaded approximately 1 million barrels of Russian Urals crude at Paradip port on Thursday, according to Bloomberg ship-tracking data. This delivery marks the first crude shipment by a tanker owned by the Russian state tanker giant since another smaller vessel, SCF Baltica, discharged fuel oil last week in Sikka, Gujarat.

Indian Oil did not respond to an email seeking comment regarding this development.

The decision by India’s largest refiner to accept a Sovcomflot tanker is significant as it may encourage other smaller refiners to also utilize Sovcomflot vessels for their oil purchases from Russia.

Refiners in India, who have become important buyers of Russian crude since Moscow’s invasion of Ukraine, had earlier decided in March against receiving oil transported on all tankers owned by Sovcomflot, following stricter US sanctions imposed in February in conjunction with Group of Seven nations to prevent Russia from evading a price cap on crude exports. This situation has led to a rotation of various traders and marketers handling Russian crude trade with India, creating an evolving network of transporters and ensuring that some cargoes continue to flow from Moscow.

Indian refiners have become more comfortable with purchasing Russian crude, including on Sovcomflot tankers, particularly after US officials visited New Delhi last month and indicated that they never expected India to halt its purchases of Russian oil, as it was in Washington’s interest to maintain energy flows and prevent supply shocks.

India’s daily crude imports from Russia surpassed 1.9 million barrels in April, the highest since July, according to data from the intelligence firm Kpler. Deliveries of Urals and Sokol crude have increased significantly month-on-month, as indicated by the data.

Meanwhile, at least five Sovcomflot tankers carrying Urals crude are signaling India as their destination this month, with the tanker Suvorovsky Prospect currently anchored off the country’s west coast, according to Bloomberg ship-tracking data.