KARACHI: The State Bank of Pakistan (SBP) on Friday night announced that it has $1 billion inflows from China as loan to build the depleting foreign exchange reserves.
In order to increase its foreign exchange reserves and satisfy the IMF’s requirement of $ 6 billion in financing before releasing the next loan tranche, Pakistan recently asked China for the quick refinancing of $1.3 billion in outstanding commercial loans.
Finance Minister Ishaq Dar, recently in a meeting with Pang Chunxue, the Charge d’Affaires of the Chinese Embassy in Pakistan raised the issue of refinancing as two Chinese commercial loans worth $1.3 billion are maturing in June. As per schedule, Pakistan was required to make a debt repayment of $300 million to the Bank of China and $1 billion to the China Development Bank this month.
During the meeting, Chinese authorities assured refinancing of both the loans.
The dwindling foreign exchange reserves and IMF’s reservations about budgetary measures have created problems for the finance minister who recently claimed that the Fund wants to see Pakistan default like Sri Lanka.
Despite these serious reservations, Pakistan is still hopeful to receive the remaining $2.2bn out of the $7bn bailout programme, which expires on June 30.
Sources said that Pakistan has paid $ 1 billion to China Development Bank during this week and as per commitment, the loan has been refinanced by China. An official of State Bank of Pakistan (SBP) has also confirmed that some $ 1 billion have been received as loan.
For the last one year, Pakistan is facing a serious crisis of foreign exchange as foreign inflows are insufficient to meet the external debt servicing. Pakistan is making efforts to get the next tranche of IMF’s Extended Fund Facility (EFF) program, however, the loan tranche is still pending as the IMF has asked Pakistan to arrange $6 billion financing for the release of IMF funds.
