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Russian delegation to arrive in Pakistan tomorrow for talks on oil, gas deal

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  • Russian delegation comprises 80 members. 
  • Team to arrive in Pakistan on January 17. 
  • Both sides to deliberate settlement of Pakistan’s debt to Russia.

ISLAMABAD: Pakistan is set to to hold bilateral talks with a Russian delegation, arriving tomorrow, on an oil and liquefied natural gas (LNG) trade deal for a long-term basis and the much-touted flagship $3 billion Pakistan Stream Gas Pipeline (PSGP) project, The News reported Monday citing senior officials of the Energy Ministry.

The delegation, comprising 80 members, will arrive in Pakistan on January 17 for three-day bilateral talks under the forum of the Inter-Governmental Commission (IGC).

“The Pakistani side will be headed by Federal Minister Sardar Ayaz Sadiq for the IGC talks. For the import of Russian oil and LNG on a GtG basis, both countries need to first negotiate the IGA (inter-governmental agreement) as had been finalised and inked in the case of the Pakistan Stream Gas Pipeline Project (PSGP), which was earlier called the North-South Gas pipeline project,” they said.

When former prime minister Imran Khan had visited Moscow on February 24, 2022, the draft of the shareholding and facilitation agreement for PSGP was not finalised. Both sides wanted to sign the PSGP deal during the Imran-Putin meeting but it did not happen because of a disagreement on some clauses of the shareholding agreement from experts from both sides.

Right now, the G7 countries have imposed a price cap of $60 per barrel on Russian crude oil with a ban on Russian ships for oil transportation. In return, Moscow said it would ban oil sales to countries that join a Western price cap on the country’s crude.

During the talks, the Pakistan side needs to discuss the shipping cost, the premium by shipping trader, insurance cover and mode of payment.

However, the agenda of the IGC unfolds cooperation in areas of trade and investments, including agriculture, energy, customs, industry, education, science and technology, information and communication technologies, communication, roads and postal service, railways, and finance. A settlement of Pakistan’s debt to Russia will also be deliberated.

Both sides will also discuss prospects of cooperation in the field of electric power, hydropower, renewable energy sources and oil and gas production.

Discounted crude oil

On December 5, 2022, Minister of State (Petroleum Division) Musadik Malik said Russia had agreed to provide crude oil as well as petrol and diesel to Pakistan at discounted rates.

“Our visit to Russia turned out to be more productive than expected,” Malik said. He added that Russia did not have LNG. “Talks with Russia private firms are underway for the import of LNG, while we have also engaged Russia’s state LNG producers,” Malik said.

According to the state minister, significant progress was made in talks over the pipeline projects with Moscow.

On its visit to Russia, Pakistan had asked for a 30-40% discount on Russian crude oil during talks in Moscow, but the Russians said they could not offer anything right now as all volumes were committed.

During talks on the gas pipeline projects, Moscow asked Pakistan to first honour its commitment to the flagship project of the Pakistan Stream Gas Pipeline (PSGP) to be laid down from Karachi to Lahore, Punjab.

In their response, the Pakistani team proposed to change the model of the PSGP project. The Russian side said that the model of the project under GtG (government-to-government) arrangement had already been settled, save for some clauses of the shareholding agreement, which would soon be finalised. 

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“Ready to work with Pakistan’s new government,” the IMF said.

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In response to the former premier’s request, IMF Director of Communications Julie Kozak stated, “I’m not going to comment on ongoing political developments,” during a news conference.

She continued by saying that they “look forward to working on policies to ensure macroeconomic stability and prosperity for all of Pakistan’s citizens with the new government.”

In addition to stating that the plan is “supporting the authority’s efforts to stabilise the economy and to, of course, with a strong focus on protecting the most vulnerable,” Kozack said the lender increased the total disbursements under the Standby Arrangement (SBA) to $1.9 billion.

This has been accomplished by closely adhering to budgetary constraints and safeguarding the social safety net. In order to keep foreign exchange reserves growing and rein in inflation, a strict monetary policy stance has been maintained, the speaker stated.

The PTI founding chairman decided to write a letter to the international lender, asking it to demand an audit of the election held on February 8 before it proceeds with discussions with Islamabad for a new loan programme. This move prompted the IMF to release its statement.

In response to the former premier’s request, IMF Director of Communications Julie Kozak stated, “I’m not going to comment on ongoing political developments,” during a news conference.

She continued by saying that they “look forward to working on policies to ensure macroeconomic stability and prosperity for all of Pakistan’s citizens with the new government.”

In addition to stating that the plan is “supporting the authority’s efforts to stabilise the economy and to, of course, with a strong focus on protecting the most vulnerable,” Kozack said the lender increased the total disbursements under the Standby Arrangement (SBA) to $1.9 billion.

This has been accomplished by closely adhering to budgetary constraints and safeguarding the social safety net. In order to keep foreign exchange reserves growing and rein in inflation, a strict monetary policy stance has been maintained, the speaker stated.

The PTI founding chairman decided to write a letter to the international lender, asking it to demand an audit of the election held on February 8 before it proceeds with discussions with Islamabad for a new loan programme. This move prompted the IMF to release its statement.

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In a new IMF agreement, Pakistan would “raise” the FBR tax-to-GDP ratio to 15%.

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The state bank reserves will be maintained at a level equivalent to three months’ worth of import bills, according to sources in the Finance Ministry.

According to sources, the ministry has also set a goal to maintain the primary balance surplus and reduce the current account deficit.

The ministry insisted that once the existing agreement expires, a new one would be negotiated with the IMF, and that the IMF will also be guaranteed that the requirements will be implemented prior to the agreement being finalised.

The founder of Pakistan Tehreek-e-Insaf (PTI) demanded that an audit of the election results be conducted before the International Monetary Fund (IMF) approved any additional loans for Islamabad. However, the IMF showed earlier today that it was eager to cooperate with the new administration in Pakistan by disregarding the demand.

According to Bloomberg News yesterday, Pakistan is to apply for a fresh $6 billion loan from the International Monetary Fund to assist the next government in paying off billions of dollars in debt that comes due this year.

According to the article, the nation would attempt to negotiate an Extended Fund Facility with the IMF, and it was anticipated that discussions with the international lender would begin in March or April.

Thanks to a short-term IMF bailout, Pakistan avoided defaulting last summer. However, the plan expires next month, and the next administration will need to negotiate a long-term deal to keep the $350 billion economy steady.

The IMF forced the South Asian country to enact a number of reforms prior to the rescue, including raising its benchmark interest rate, changing its budget, and raising the cost of natural gas and electricity.

According to a fund spokeswoman, the IMF staff is still in communication with authorities on the necessary longer-term reform initiatives. The fund is also prepared to assist the post-election government in addressing Pakistan’s ongoing issues by means of a new arrangement, should that request be made.

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39% increase in IT exports in January: Dr. Umar Saif

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According to Dr. Umar Saif, the acting minister for information technology and telecommunication, IT exports increased by 39.4% to $265 million in January of this year from $190 million in the same month the previous fiscal year.

The IT sector in Pakistan is expanding and breaking records. The minister wrote on X that “IT exports in January are up by 39.4% to $265 million, compared to $190 million in the same month in 2023.”

The minister also revealed that IT exports to the United States over the first seven months of the current fiscal year (July–January) were $1.7 billion, up 13 percent from $1.5 billion in the same time previous year.

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