New deals with UAE delayed as JMC meeting postponed

$3b deferred oil payment facility was on the agenda

Shahbaz Rana February 19, 2019
The UAE, China and Saudi Arabia have offered over $14.5-billion loan package to help Pakistan meet its external financing needs during the current fiscal year. PHOTO: FILE

ISLAMABAD: The United Arab Emirates (UAE) has postponed a scheduled meeting of the Joint Ministerial Commission (JMC), which will delay the signing of new agreements for economic cooperation.

The meeting was planned to take place last week in Abu Dhabi, according to government officials. Foreign ministers of Pakistan and the UAE co-host the JMC meetings. UAE Foreign Minister Abdullah bin Zayed Al Nahyan was not available on the due dates and the meeting was postponed at the UAE’s request, they added.

A spokesman for the Economic Affairs Division (EAD), which serves as the secretariat of all the JMCs, confirmed to The Express Tribune that the meeting had been postponed.

“The JMC meeting has been postponed at the UAE’s request due to unavailability of its foreign minister,” said EAD Additional Secretary Zulfiqar Haider. He added that three new dates had been proposed and the meeting would take place as soon as the UAE confirmed availability of its foreign minister.

In November last year, Pakistan and the UAE agreed to hold the 12th round of JMC in early 2019. During last month’s visit of Prime Minister Imran Khan, it was decided that the meeting would take place in February. Subsequently, the dates of February 12-13 were finalised with mutual consent.

The 11th JMC had been held in November 2013, six months after the PML-N came to power. Since then, no meeting has taken place, which has left many issues unresolved for years.

During the 12th JMC meeting, both sides had planned to discuss issues to enhance cooperation in energy, investment, tourism and other areas of mutual interest. Pakistan has also proposed the signing of an economic framework agreement to prioritise areas of cooperation, which is expected to be inked during the 12th JMC.

The issue of $3-billion UAE oil facility on deferred payments was also on the agenda, according to the government officials.

Bilateral trade between Pakistan and the UAE stood at $10.3 billion in the last fiscal year. Imports from the UAE stood at $8.9 billion while Pakistan exported $1.4 billion worth of goods. Last month, the UAE announced a $6-billion package for Pakistan. This includes $3 billion in cash injection and another $3 billion in oil supply on deferred payments. The UAE has already disbursed $1 billion.

However, the modalities of oil supply on credit have not yet been finalised. The Ministry of Finance is working on the modalities.

The UAE, China and Saudi Arabia have offered over $14.5-billion loan package to help Pakistan meet its external financing needs during the current fiscal year. Pakistan needs this breathing space by the time it finalises an arrangement with the International Monetary Fund (IMF).

However, talks with the IMF are not moving forward at the desired pace even after a meeting between Prime Minister Imran Khan and IMF Managing Director Christine Lagarde in Dubai.

A video conference was also held last week between Pakistan and the IMF. Both the sides discussed the monetary policy under a possible IMF programme, according to finance ministry officials.

So far, Saudi Arabia has fully delivered on its commitment. It has already disbursed $3 billion in cash deposit and a framework agreement has been signed between the government of Pakistan and Saudi Fund for Development.

Pakistan and Saudi Arabia signed an agreement on Sunday for a $1-billion annual oil facility on deferred payments.

“Administrative arrangements for implementing the oil facility have already been finalised and after signing of the agreement, the oil facility is expected to be operational in the next few weeks,” said Dr Najeeb Khaqan, Adviser to Finance Ministry on Monday.

He said Pakistan would receive $250 million worth of oil on deferred payment every month. “This will ease pressure on the balance of payments.”

Saudi Crown Prince Mohammad bin Salman has announced a $20-billion investment package for Pakistan. This includes $4 billion worth of investment in two liquefied natural gas (LNG)-fired power plants, which Pakistan wants to privatise before June to cut its budget deficit.

Published in The Express Tribune, February 19th, 2019.

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