China Okays $1.3bn Loan Rollover For Pakistan

China Okays $1.3bn Loan Rollover For Pakistan
Finance Minister Ishaq Dar announced on Friday that Pakistan has received $500 million from a Chinese bank as part of a $1.3 billion facility authorised by the Industrial and Commercial Bank of China (ICBC).

The cash-strapped nation has experienced escalating economic hardships, including soaring inflation, declining foreign exchange reserves, a mounting current account deficit, and currency depreciation.

The finance minister tweeted, "Forms completed [and] Chinese Bank, ICBC granted rollover of $1.3 billion facility that has been returned by Pakistan to ICBC in recent months.

He stated that the facility would be paid out in three installments, with the State Bank of Pakistan has already received the first installment, worth $500 million. "That will boost foreign exchange reserves!" Dar included.

As of February 24, there were only $3.8 billion in foreign exchange reserves, or only enough to cover one month's worth of imports. While the amount of readily available foreign exchange reserves is roughly $9 billion, $5.5 billion of those are net reserves held by commercial banks.

Hours before his announcement, the finance minister said China had renewed a loan under which Pakistan anticipated an extra inflow of $500 million in the "coming few days."

Dar emphasised the economic successes of the PDM-led government, noting that the SBP's foreign exchange holdings increased from $2.8 billion last month to $3.8 billion this month. He insisted that during the current fiscal year, the government paid back $6.5 billion in foreign debt.

Apart from the $1 billion sukuk payment, Pakistan has paid out about $5.5 billion. He mentioned that $3.5 billion had been handed to banks in other countries, as well as $2 billion to the China Development Bank and ICBC.

"While debt is frequently renewed, its stock does not go down. We are lowering our debt level," Dar added. "ICBC formalities were finished last night. We gave it back $1.3 billion, and because it was renewed, we will get the money back in three installments."

The finance minister said, "In three installments of $500 million, $500 million, and $300 million, we returned $1.3 billion. It will be returned to us in the same manner. In two to three days, Pakistan will receive $500 million. It could arrive on Monday. Then, in ten days, we will receive an additional $500 million."