Cash-strapped Pakistan has secured $1 billion from its close ally China to shore up its razor-thin reserves
Published Date – Sat 17 Jun 23 at 07:50pm
Islamabad: Cash-strapped Pakistan has secured $1 billion from its close ally China to shore up its extremely low foreign exchange reserves amid uncertainty over the resumption of stalled IMF lending.
The State Bank of Pakistan (SBP) confirmed late on Friday that it had received the payment from China, but gave no other details.
That would add to reserves that have fallen to nearly $3.9 billion in recent weeks.
Earlier, Finance Minister Ishaq Dar said that Pakistan had repaid $1 billion to China last Monday, while the due amount was $1.3 billion and hoped that the amount would be returned.
Pakistan’s economy is on the brink of default as the IMF is pushing the county to the limit to meet demands – which Islamabad insists it has – to provide the remaining $2.5 billion of a $6.5 billion bailout package agreed in 2019.
Full payment is unlikely as the scheme ends on June 30, but Pakistan is pushing for a $1.1 billion payment as a symbolic gesture of Washington’s fund’s endorsement of its policies.
Without IMF support, the country cannot access multilateral loans or even bilateral aid. Only China is steadfast in helping Pakistan, while Saudi Arabia and the UAE also provide support selectively.
Dar earlier lashed out at the IMF and claimed geopolitics was behind its lending package, as the global institution wanted Pakistan to default like Sri Lanka before entering negotiations.
Pakistan has feverishly explored options for keeping its economy afloat without IMF support. The policy options announced by Dar suggest that Pakistan will pay multilateral loans on time while discussing the extension of bilateral loans with individual countries.
As China looks forward to rolling over about $9 billion in loans to various countries in the next fiscal year starting July 1, it is hoped that China will roll over $4 billion in bilateral loans.
Pakistan is also considering refinancing a $300 million loan from the China Development Bank due on June 30.
