Pakistan leans on Qatar for LNG amid falling foreign currency reserves
Finance Minister Miftah Ismail said on Saturday that Pakistan will seek a deferred payment plan for liquefied natural gas (LNG) bought under long-term deals with Qatar as the nation’s economy continues to stay in the doldrums while it awaits IMF funds amid falling foreign currency reserves.
“We’ve talked about a deferred payment plan or at least I’ve requested this and petroleum minister is doing negotiations and is going to do the talks”, he said.
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Pakistan awaits IMF funds, as the country is faced with falling foreign exchange reserves which is only enough for less than 45 days of imports, and a huge current account deficit.
Moreover, there is a huge current account deficit with energy purchases dominating the record import bill.
Miftah unveiled the 2022-23 budget on Friday aimed at fiscal consolidation as Pakistan tries to convince the International Monetary Fund (IMF) to restart much-needed financial support.
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But the lender has expressed concerns over the numbers, including its current account deficit.
Petroleum Minister Musadik Malik, who was in Doha this week for talks with Qatari Minister of State for Energy Affairs and Qatar Energy chief executive Saad al-Kaabi, confirmed talks but said the government was exploring different “innovative” pricing and supply strategies in broad-based talks.
“Deferred payment obviously would be enormously beneficial for Pakistan in the way of cash flows, but that is not the only discussion that we are having”, Malik said in an audio message, describing the discussions as “preliminary”, however, Qatar’s government did not immediately respond to the request.
Pakistan already has two long-term supply deals with Qatar, the first signed in 2016 for five cargoes a month, and the second in 2021, under which Pakistan currently gets three monthly shipments but the nation is currently under a massive grip of widespread power outrages as procurement of the chilled fuel remains unreliable and expensive due to its increased reliance on LNG for electricity generation.
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Ismail said the government was also speaking to Qatar about a new five or 10-year LNG supply deal for three monthly cargoes, as well as an additional cargo under an existing deal.
The fast depletion of the foreign exchange reserves was the result of Pakistan’s inflation of twin deficits, and a lack of foreign currency inflows.
Inflation in Pakistan entered the double-digit mark in July, the biggest surge in nearly six years.
In April, imports increased by 72 per cent, leaving no room for the government to improve its external balances while the foreign exchange reserves of the central bank have touched 10.3 billion dollars, the lowest since June 2020.
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