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Saturday, July 20, 2024  
13 Muharram 1446  

Here is what PM Shehbaz hopes to achieve during his China trip

Meetings will centre around CPEC and rescheduling debt payments

Prime Minister Shehbaz Sharif departed for China on a five-day official visit on Tuesday. He was also accompanied by multiple cabinet members

The visit will include meetings with Chinese president and prime minister.

According to various anonymous stakeholders, the purpose of the visit is to delay pending contractual obligations to Chinese companies, reschedule rollovers and budget support loans until the completion of the ongoing Extended Fund Facility (EFF) program with the IMF and launch the second phase of the China-Pakistan Economic Corridor.

Independent economists have expressed doubts about whether China will approve all three items on Pakistan’s wish list. They argue that the delays in payments to Chinese firms are linked to the launch of CPEC’s second phase, and that China has previously told Pakistani delegations that it will not renegotiate the terms of existing contracts, as that could set a precedent for other countries.

When approached, officials from Pakistan’s Finance Ministry claimed total ignorance about the agenda items for the Prime Minister’s visit. Sources reveal that only a handful of people around the Finance Minister are aware of the situation, and even staff members who were previously involved in the budget process are now sidelined.

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The date for presenting the upcoming budget has not been finalized, which independent economists believe may be because Pakistan is waiting for China, as its largest creditor, to extend the support sought by the government. This support could be crucial for securing an IMF staff-level agreement on a new program, a prerequisite for a new funding arrangement.

However, sources indicate that Prime Minister Sharif hopes to secure Chinese cooperation in areas such as agriculture, information technology, energy, and alternative energy under CPEC. He has directed federal ministries to prepare new collaboration projects between the two countries in these sectors.

A successful outcome from the Prime Minister’s visit to China is expected to boost investor confidence and lead to increased overall investment, according to government officials.

Additionally, the National Economic Council (NEC) meeting, the release of the Economic Survey, and even the budget date have all been put on hold until the Prime Minister’s return from China. The NEC, which approves the development budget and sets macroeconomic targets for the next fiscal year, has not yet been constituted, and these formalities will likely be completed after the Prime Minister’s return.

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Shehbaz Sharif