In a positive development, China on Friday rolled over a $1 billion loan to Pakistan shoring up the State Bank of Pakistan-held (SBP) foreign exchange reserves.
The development came hours after Finance Minister Ishaq Dar informed the National Assembly's Standing Committee on Finance and Revenue that China would be refinancing the $1 billion loan it had given to Pakistan earlier.
“$1 billion will come from China today or on Monday,” Dar had told the lawmakers. The minister also stated that talks are ongoing with the Bank of China for a loan of $300 million. He added that Pakistan will also receive dollars under China's swap agreement.
A day earlier, the State Bank of Pakistan had shared that the country’s foreign exchange reserves — held by SBP and commercial banks — stood at $9.4 billion for the week ending on June 9.
With the $1 billion funds, it would mean that reserves have gone up to $10.4 billion.
According to the finance minister, the International Monetary Fund (MF) has set external financing as a pre-condition for Pakistan.
The news of the refinancing was reported by The News earlier this week. A report published in the paper stated that Pakistan has requested China to refinance commercial loans of $1.3 billion within the ongoing month but despite that, without the revival of the IMF programme, the foreign exchange reserves held by the State Bank of Pakistan might drop to below $3 billion.
Cash-strapped Pakistan is working to revive its stalled IMF programme expiring this month as it faces a severe liquidity crunch.
Pakistan is working to revive the stalled International Monetary Fund (MF) programme expiring this month as it faces a severe liquidity crunch.
However, Pakistan is seeing no signs of securing external financing any time soon amid political instability — which has had a huge impact on the deteriorating economy.
The $350 billion economy is in turmoil amid financial woes and the delay in an agreement with the IMF that would release much-needed funding crucial to avoid the risk of default.
The government has been in talks with the Washington-based lender since end-January to resume the $1.1 billion loan tranche that has been on hold since November, part of a $6.5 billion Extended Fund Facility (EFF) agreed upon in 2019.
The problem arises with the repayment of $900 million to multilateral creditors by the end of June 2023 in the shape of principal and mark-up repayments.
US president already showed his fondness for weaponising US' financial power, ordering tariffs on key trade partners
IMF’s main focus on encouraging countries to correct macroeconomic imbalances, says finance ministry
Musk leading Trump's federal cost-cutting efforts under so-called Department of Government Efficiency
Latest data reveals hospital charges rose 0.36% in January alone and 13.09% year-on-year
Employees in Germany, France, Italy and the Netherlands will be exempt from the cuts "due to local regulations"
SBP decision to cut policy rate to 12% underscored recent progress in taming inflation, notes Fitch