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Print Print 2023-06-14

$7bn Chinese, Saudi deposits: Rs402bn paid as cost of rollovers

  • Economic Affairs Division, sources say, requested ECC to accord approval for provision of Technical Supplementary Grant
Published June 14, 2023

ISLAMABAD: The federal government is said to have paid over Rs 402 billion (approximately $1.7 billion @ Rs 235/USD) cost of rollovers of $7 billion Chinese and Saudi deposits, well informed sources in Finance Division told Business Recorder.

As per Rules of Business, 1973, the Ministry of Economic Affairs is responsible for, amongst other, external debt management, including authorization of remittances for all external debt servicing, compilation of data, accounting and analysis of economic assistance from foreign governments and organisations.

Furthermore, the Ministry of Economic Affairs is also responsible for making repayments of foreign loans and credits contracted by Federal Government for projects and other borrowings arranged by the Finance Division including short-term borrowings, Euro bonds, Sukuk bonds, etc.

For this purpose, the Economic Affairs Division, for budgeting purposes, is required to prepare budget estimates for debt servicing of foreign loans and credits obligated upon Federal Government budget.

$2bn Saudi deposits: Pakistan to pay 4pc annual profit

Accordingly, for financial year 2022-23, estimated budgetary allocations were Rs 4,446 billion for servicing of foreign loans and credits.

However, revised estimates have been prepared amounting to Rs 4,044 billion for the current financial year against the following demands: (i) Foreign Loan Repayments (FLR)- budget estimates, Rs3,792,400,505,000- revised budget, Rs 2,988,300,528,108, i.e. saving of Rs 804,099,976,892; (ii) repayment of Short-Term Foreign Loan Credits (RSTFC)- Rs 142,771,740,000, revised budget estimates Rs 330.625,097,613, i.e., excess Rs 187,853,357,613; and (iii) Serving of Foreign Debts (SFD) budget estimates for 2022-23, Rs 510,971,762,000- revised estimates Rs 725,369,850,033, i.e., Rs 214,398,088,033.

Sharing the details, sources said, on June 5, 2023, Ministry of Economic Affairs, sought permission of Finance Minister Senator Ishaq Dar as Chairman Economic Coordination Committee (ECC) of the Cabinet to table the summary titled “provision of Technical Supplementary Grant of Rs 402.252 billion on account of revised budget estimates for FY 2022-23” under demands related to debt servicing for foreign loans and credits as an additional item in view of the exigency in the matter which he granted.

According to sources, the Economic Affairs Division briefed the forum about the case as stated in the summary, saying that the revised estimates for the financial year 2022-23 indicate saving of Rs 804.09 billion in demand, whereas excess expenditure of Rs 402.25 billion (Rs187.853 billion + Rs 214.39billion) Technical Supplementary Grant (TSG) of Rs.402.251 billion was required. Of this, the amount of RSTFC was Rs 187,853,357,613 and SFD amount of Rs 214,398,088,033.

Ministry of Economic Affairs further explained that the reasons of excess/ savings in demands were given as follows: (a) USD 7,000 million of China SAFE Deposit and Saudi Time Deposit were rolled over; and (ii) budget estimates for the FY 2022-23 were prepared on the basis of parity exchange rate of PKR 186/- per USD, whereas actual payments have been made at average exchange rate of Rs. 235 per USD.

The Economic Affairs Division, sources said, requested the ECC to accord approval for provision of Technical Supplementary Grant amounting to Rs 402,251,445,646 against the savings amount of the summary.

The Chairman, ECC invited comments/ views of Secretary, Finance Division during the meeting, who supported proposed TSG.

After brief discussion, the ECC granted approval of Economic Affairs Division’s proposal titled “provision of Technical Supplementary Grant of Rs 402.252 billion on account of revised budget estimates for FY 2022-23” under demands related to debt servicing for foreign loans and credits. The ECC has approved Rs 5.252 billion Technical Supplementary Grant for Ministry of Defence and its Executive Departments during CFY 2022-23.

The Defence Division briefed that owing to financial constraints of Government of Pakistan, cushion of an amount of Rs 5.252 billion had been created in defence budget to manage critical ’shortfall of civil demands through Technical Supplementary Grant during CFY 2022-23. Finance Division had agreed to the proposed TSG.

Copyright Business Recorder, 2023

Comments

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Tulukan Mairandi Jun 14, 2023 09:57am
There we go. The true "cost" of friendship with Iron Brother . Despite Pakistan's DIRE situation, they are ripping us of at every angle, from CPEC to rollovers
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Yogesh (India) Jun 14, 2023 10:13am
Pakistan is taking money from Saudi,UAE,America,IMF and so on to give it to Iron Brother to make China rich. What a friend ....
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Saeed Khan Jun 14, 2023 10:29am
The cost of rollover can't be Rs.402 billins. It will be as under: $7000 million×4% ( interest ) = 280 million= 280× 235=Rs 65800 millin= Rs 65.8 Billion So cost of rollover would be Rs 65.8 Billion and not Rs 402 billion. Pl. Make necessary correction , regards
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KhanRA Jun 14, 2023 10:51am
@Yogesh (India), truly, for the first time in my life I am beginning to think Partition was a huge mistake that hurt us more than it hurt you.
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Shehzad Saleem Jun 14, 2023 12:02pm
@Saeed Khan, Rollover fee is agreed between the two borrowers and lenders, usually very high and calculated daily, can range from 0.3% – 0.5%/day/total loan amount.
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Jhany Waalker Jun 14, 2023 03:00pm
I see there are more Indian Trolls out today.
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Ali Shah Jun 14, 2023 04:00pm
Yes roll over cost of 402B looks unreal and not correct
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Awami Jun 15, 2023 04:06am
@Tulukan Mairandi, In business there is no friendship but it business in money. It costs money.
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Awami Jun 15, 2023 04:11am
@Saeed Khan, you are factually wrong. Read carefully. " The federal government is said to have paid over Rs 402 billion (approximately $1.7 billion @ Rs 235/USD) cost of rollovers of $7 billion Chinese and Saudi deposits, well informed sources in Finance Division told Business Recorder."
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Awami Jun 15, 2023 04:18am
@Ali Shah, It is stated clearly $1.7 Billion is cost for roll over for 7Billion. 1.7/7=.2428 , ie rate appears 24.28% for rolling over 7Billion. Appears very excessive but they are giving credit to party with bad credit history.
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Awami Jun 15, 2023 04:21am
@Ali Shah, 403 Rs/235= $1.71 B
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