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The UAE has offered to buy minority stakes in publicly listed state-owned companies at negotiated prices, with a seat on each company’s board, in response to requests from cash-strapped Pakistan for further loans. China has decided to extend another $2 billion of Pakistan’s debt due between June 27 and July 23, giving Islamabad some much-needed respite after paying $2.3 billion last week.
If accepted, the proposal would deviate from the usual lending relationship between Islamabad and Abu Dhabi and provide a significant boost to a cash-strapped government, the Daily Express reported.
According to sources cited by The Express Tribune, the UAE government has offered to use its sovereign wealth fund to buy 10-12% of shares in publicly traded government-owned companies.
The report quoted Finance Minister Mifta Ismail as saying that a friendly country proposed to buy shares in Pakistani companies through repurchase, which entails buying securities backed by secured loans.
According to sources, the UAE has explicitly offered to buy stakes in these companies. However, they claim the government wants to include a clause in any such deal giving it the right to buy back the assets after a certain time.
Pakistani Prime Minister Sheikh Baz Sharif called for a multi-billion-dollar bailout when he visited the UAE in April. According to sources, the UAE has sent a delegation to Pakistan at the request of the Prime Minister and met with Sharif in Lahore in the first week of May.
Pakistan is trying to revive the IMF program and is awaiting a draft Memorandum of Economic and Financial Policy (MEFP) document ahead of talks with the IMF on a staff-level deal.
According to sources, Pakistan has not repaid the $2 billion loan it received in February 2019, so the UAE is not ready to provide Islamabad with another $2 billion cheque this time around.
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