Finance Minister Ishaq Dar has clarified that all payments would be made on time amid reports that the country would not be able to make it on time, leading to default.
“All arrangement is in place for such payments and there is no need to worry,” he said in a live address on PTV. “We have less than two weeks [for $1 billion of payment to China] and all payments will be made on time and foreign reserves will be maintained. There will be no major change in it.”
His clarification came a day after the central bank announced that it has received $1 billion from China, without sharing any other details about the nature of this inflow.
Dar address on the state broadcaster was meant to clarify some confusion over timing of the payment.
“So, I want to clear that in the month of June, our main due payments… out of that $1 billion was of China Development Bank and $300 million was of Bank of China. These payments were due in the final week of the month and our arrangements with Chinese banks are this we return our payments,” he said.
The finance czar added that “normally” the flow of money takes “few weeks”, however, it took a few months in the past related to the early payments.
“Keeping in view that thing, as this financial year is closing on June 30. Call it a management funds strategy we [finance ministry] contacted both banks of China and offered them that we will pay these payments before the end of the month.”
He added that it was a standard practice to charge fee or penalty on early payment of loan, however, the government managed to convince the banks to avoid it.
“So it was decided that these payments, which we will pay, will be returned to us on fast track basis,” he said.
Pakistan reportedly paid $1 billion to China last Monday against a reportedly due amount of $1.3 billion and the amount was returned to the country last Friday.
Pakistan paid its liability in last week and in one week, he said and described it as “fastest execution of the agreement”. He was hopeful that the second payment of $300 million would be returned in next three to four days.
According to Dar, the third major payment of $1 billion would hopefully be renewed.
The finance czar also spoke about Shell’s decision to sell its stake in Pakistan.
“In the past three days, it is being discussed and hyped in media that shell’s investment and shares in Pakistan is selling its business. This is not correct,” he said and added that such information needed some clarification.
Shell Pakistan on Wednesday said that parent Shell has notified it of the group’s intent to sell its shareholding in the business.
Shell Petroleum Company (SPCo), the immediate parent company, owns 77% of the local operations, which suffered losses in 2022, due to exchange rates, the devaluation of the Pakistani rupee, and overdue receivables.
“Shell business will continue. Hundreds of its employees will not be fired,” Dar said.
He added that the petroleum company wanted to sell its shares to another international investor.
Shell wants to sell its shares to a foreign direct investor, the finance minister said and added that there should be “nothing to worry”. He said that Shell business in Pakistan would be as it is, the company would not sell its business and take money outside.
“It [the decision] is not related to Pakistan situation,” he said and while quoting the information he has added that the petroleum company had taken similar steps in many European countries. “It is their policy and an internal decision.”
He called for not paying attention to such news in “negative way”. Dr claimed that the government knew about this and the new investor wanted to keep Shell name.
