More Pay-outs, Less Pay-ins
The hidden Chinese debt facility costs Pakistan PKR 36.3 billion.
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The economic division at the Pakistan secretariat has faced behemoth challenges in the past with regard to managing the country’s current accounts. But the pressure mounts, as Pakistan suffers to meet its international financial obligations. Although, the loss and damages fund spearheaded by Pakistan at COP27 may lead to further international help in this matter. But, silence from the West clouds the hopeful skies.
Pakistan is to repay Chinese debt if it plans to continue collaboration in terms of the China-Pakistan Economic Corridor (CPEC). But diminishing foreign reserves won’t allow for that to happen unless the country's pay-ins try to balance the pay-outs. This month, State Bank’s foreign reserves have fallen to USD 7,959.5 million with many pending payments.
A hidden debt accrued by Pakistan following 2011, is 'currency swap agreements'. Such agreements allow a bilateral exchange of currency between two countries, with a set interest payment accrued every month. In the past, Pakistan’s incentives have included ease in trade and foreign direct investment. In general, the agreement provides more liquidity than debt and is much cheaper than other kinds of debt. It’s particularly worrisome for Pakistan, due to its scathing currency value.
The country’s foreign exchange circumstances have staved off investment opportunities, the government is likely to fail in its payment on Sukuk bonds. A few positive expectations include Saudi’s USD 10 billion loans and the reduction in oil prices globally. Challenging times lie ahead, but the government has failed to formulate a sustainable export-oriented plan till now.
GRAPHIC OF THE DAY
Pakistan's exports show an upward trend, however, the production isn't enough to cater to Pakistan's greenback needs
INSTAGRAM POSTS
Exports October 2022 — www.instagram.com
⚫ Exports decreased by 7.4% during October 2022 compared to September 2022
⚫ Exports decreased by 2.9% compared to October 2021
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Imports October 2022 — www.instagram.com
⚫ Imports decreased by 4.4% during October 2022 compared to September 2022
⚫ Imports decreased by 23% compared to October 2021
View more
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