After securing a $3bn loan from the International Monetary Fund (IMF), Pakistan has received an offer for liquefied natural gas (LNG) shipments for the first time in over a year. The offer from Trafigura Group comes as a positive development for the crisis-hit country, which has been struggling to secure LNG supplies due to its financial challenges.
Last month, Pakistan's attempt to purchase LNG from the spot market failed as no supplier responded to the country's offer. This was seen as a reflection of the nation's cash-strapped situation. However, with the recent approval of the IMF loan, Pakistan's government finances are expected to improve, creating a more favorable environment for trade deals.
Trafigura Group has offered two LNG shipments for delivery from January to February. The prices offered are reportedly at a 30% premium to current market prices, which is higher than usual for spot purchases. While the tender for the LNG purchase will be awarded on July 31, it remains uncertain whether Pakistan will proceed with the deal. In the past, credit risk has been a significant barrier for LNG suppliers considering spot shipments to Pakistan.
The deposit of $1.2bn by the IMF into the State Bank of Pakistan's (SBP) account further strengthens Pakistan's hope for economic stability. This deposit is part of the approved $3bn Stand-By Agreement (SBA), which aims to address the country's pressing financial needs. The funding provided by the IMF has alleviated concerns about Pakistan's potential default, offering a lifeline to the nation's struggling economy.
Finance Minister Ishaq Dar expressed optimism about the country's foreign exchange reserves, stating that they are expected to close at around $13 to $14bn on July 14. The exact figures will be released by the SBP in due course. With the IMF loan and the potential LNG shipment deal, Pakistan's economic prospects may be gradually improving, bringing much-needed stability to the nation.
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