CASH- STARVED PAK MAKES APPEAL FOR FRESH LOANS, UAE OFFERS BAILOUT DEAL
Business Standard - June 28, 2022
In response to cash-strapped Pakistan's request for fresh loans, the UAE has offered to buy minority shares in publicly-listed government-owned companies at a negotiated price and a seat on each of the firm's boards, according to a media report on Tuesday.
The development comes amid China's decision to roll over another USD 2 billion Pakistani debt that matures from June 27 to July 23, providing a sigh of relief to Islamabad after transferring USD 2.3 billion last week.
The offer, if accepted, could give a big boost to the cash-starved government and will mark a departure from the traditional lender-borrower relationship between Islamabad and Abu Dhabi, The Express Tribune newspaper reported.
The Express Tribune quoting sources said that the UAE government has offered to acquire 10-12 per cent shares in government-owned companies that are listed on the stock market through its sovereign wealth funds.
There is a proposal from a friendly country to
purchase Pakistani companies' stocks on a buy-back basis, which means buying secured-loan-based securities, Finance Minister Miftah Ismail was quoted as saying in the report.
The sources said that the UAE had made a clean offer for the acquisition of stakes in the firms. But the government wanted to add a provision in any such contract where it will have a right to buy back these stakes after a certain period, they added.
The UAE has made the offer on the lines it invested USD 2 billion in Egypt through the purchase of stakes in a number of state-owned companies in April this year aimed at bailing out the Egyptian government.
The offer came in response to Prime Minister Shehbaz Sharif's request for a multibillion-dollar bailout package during his visit to the UAE in April. The sources said that in response to the prime minister's request, the UAE had sent a delegation to Pakistan that met with Sharif in the first week of May in Lahore.
