By Muzzammil Aslam
The hopes of Chinese financial assistance were key consideration before starting China visit by Prime Minister Imran Khan. It was reported by the media that Pakistan would get around $9 billion through deposit, soft loan and CPEC related funding.
However, Prime Minister almost reaching finishing line of his trip and only the joint statement released on Sunday. The joint statement, however, unleashed no financial commitment.
In my opinion it isn’t a surprise because Chinese helping hand is always invisible and unlike US and Saudis they hate to show off. With best of my sources, I believe, China will immediately release the $3 billion soft loans.
The term-deposit is already part of currency swap agreement between the two central banks. Pakistan runs the trade deficit of $12 billion and this is main source of trade, external and foreign exchange imbalance.
If China People’s Bank accepts Pak Rupee then eventually the deficit issue could be resolved. In the joint statement, it was hinted that both countries trade will be denominated in local currencies and by-pass dollar.
This may some -how compile our debt in Chinese Yuan. It would be interesting to see what Cabinet and government inform to Parliament and nation.
Market may behave impatient if government fails to clarify the outcome. If that will be the case then buying on dips will be main trade advice from ours side. Other interesting point to consider- despite deteriorated law and order situation the staff funds team have decided to schedule Pakistan trip.
Hope they land softly and imposes normal conditionality for new upcoming program. Monday is important and it will set the tone for market rest of week.