Contractual obligations, rollovers, loans: PM’s China visit aims at getting a breathing space

ISLAMABAD: Prime Minister Shehbaz Sharif’s visit to China aims to secure delays in pending contractual obligations to Chinese companies, reschedule rollovers and budget support loans till the end of the under consideration Extended Fund Facility programme and launch of phase II of China Pakistan Economic Corridor.

This was revealed by various stakeholders on condition of strict anonymity.

The wish list is very ambitious and it is doubtful if China will approve all three items on the list, independent economists commented to BR.

PM Shehbaz to visit China on June 4: FO

They argued that the delays in pending contractual dues to Chinese companies is linked to the launch of Phase II of CPEC, and the Chinese have already told previous high level Pakistani delegations that they will not renegotiate the terms of the contracts as projects in other countries would then be up for renegotiation.

When Business Recorder sought a response from Finance Ministry officials on the agenda items they expressed their total ignorance. A handful of people around the finance minister know the situation. Even the staffers that in previous years were engaged in the budget exercise this year are simply twiddling their thumbs, sources further added.

The date of the budget presentation is still not firmed up and independent economists maintain that this maybe because unless China, as Pakistan’s largest creditor, extends support sought by Pakistan the IMF may not agree to a staff level agreement on the successor programme, the first stage in securing a new programme.

Sources said that the prime minister hopes to secure Chinese cooperation in agriculture, information technology, energy, and alternative energy under CPEC and has directed the federal ministries to prepare new cooperation projects between the two countries in this regard.

A successful visit of Shehbaz Sharif can increase investors’ confidence and subsequently lead to overall investment, officials believe.

Background interaction with the officials reveal that the budget date, the National Economic Council (NEC) meeting, or release of the Economic Survey, all have been put on hold till the prime minister’s return from China.

According to the officials, the NEC that approves the development outlay and set macroeconomic targets for the next fiscal year has not yet been constituted and all the formalities in this regard will most likely be met after the prime minister’s return from China.

Sources said that there is no clarity whether the prime minister would return on 7th or 8th of June; however, they added the Federal Board of Revenue (FBR) is finalising tax-related proposals and the finance bill, keeping in view the tentative budget date of June 10, 2024.

Copyright Business Recorder, 2024