Chinese investors ask 'iron brother' Pakistan to relocate funds

Pakistans economic woes continue to dampen its credibility among global investors as now its closest ally friend and iron brother China too has put forward a demand which has forced emergency consultations in IslamabadAmid increased fears of a complete meltdown of the Pakistani economy leading to default Chinese investors have told Islamabad to relocate funds in offshore bank accounts to service debts sustained for establishing energy plants under the ChinaPakistan Economic Corridor CPECMoreover Chinese investors have also insisted that Islamabad should clear 125 million in dividends it owes to Chinese firms functioning in PakistanThe Chinese demand has forced emergency huddles in relevant quarters of the Pakistan government who are now contemplating and consulting the kind of response that should be givenSources aware of the development say that Pakistan has not accepted the demand till now and is being cautious over its potential reactionIslamabad is also cautious about potential reactions from the International Monetary Fund IMF to any new concessions to Beijing said the government sourcePakistans Finance Minister Muhammad Aurangzeb has urged focused caution in accepting any Chinese demandThe Finance Minister has cautioned the Cabinet Ministers in accepting any Chinese demand at the moment due to sensitivities surrounding the upcoming bailout programme talks with the IMF said a senior officialThe government maintains that Islamabad has never defaulted on Chinese energy debt repayments a reasoning that may be used to respond to Chinese investors demandPakistan is also expected to put forward its response during the Joint Working Group on Energy meeting in Beijing next weekOne more reason for the latest Chinese demand sources reveal is that Chinese investors are finding it difficult to obtain new loans due to financial troubles in PakistanTo address banks concerns investors are now seeking to place funds in offshore accounts to demonstrate their revenue streams the official who requested anonymity saidChinese investments in energy projects in Pakistan are estimated at a value of at least 21 billion while the Chinese debt for energy projects stands at around 15 billionChina has established energy projects in Pakistan with an understanding of 75 per cent debt and 25 per cent equity Now it has to pay annual payments of about 24 billion in debts and dividendsOn the other hand Pakistans thin foreign exchange reserves 9 billion currently block the central banks capacity to allow outflow of fundingMost of these reserves were acquired through foreign loans and purchasing of around 55 billion from the open marketIslamabad is also not ready to cater to any demand from China that may have any negative impact on the upcoming Pakistan visit of an IMF teamHowever ignoring the Chinese demand is also something that the current government cannot afford to doThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever