China to provide $2.3 billion loan to cash-strapped Pakistan

At the end of March, the foreign exchange reserves held by the State Bank of Pakistan fell by a massive USD 2.915 billion, due to the repayment of external debt

ANIUpdated: Thursday, June 23, 2022, 08:36 AM IST
article-image
Foreign Minister of Pakistan Bilawal Bhutto Zardari, left, with Chinese Foreign Minister Wang Yi | Twitter/@BBhuttoZardari

To cope with the country's dwindling cash reserves, a loan of USD 2.3 billion from a Chinese consortium of banks to Pakistan is expected within a "couple of days".

Notably, a Chinese consortium of banks and Pakistan had signed a USD 2.3 billion loan facility agreement earlier. In a latest update on the agreement, on Wednesday, Pakistan's finance minister Miftah Ismail said that cash inflow under the loan agreement is expected within days, reported Pakistan's local media outlet Dawn.

Taking to Twitter, Ismail wrote, "The Chinese consortium of banks has today signed the RMB 15 billion (~$2.3 billion) loan facility agreement after it was signed by the Pakistani side yesterday. Inflow is expected within a couple of days. We thank the Chinese government for facilitating this transaction."

Foreign Minister of Pakistan Bilawal Bhutto Zardari wrote on social media, "Grateful to President Xi Jinping, Foreign Minister Wang Yi and the people of China. Chinese consortium of banks has today signed the RMB 15 billion loan facility agreement, the people of Pakistan are grateful for the continued support of our all-weather friends."

Pakistan is in a deep financial crisis and this development comes after reports emerged of Pakistan reaching an understanding with the International Monetary Fund (IMF), as per the media outlet.

Ismail said that after a visit by Foreign Minister Bilawal Bhutto-Zardari and follow-up discussions by Prime Minister Shehbaz Sharif with Prime Minister Li Keqiang, the Chinese side had not only agreed to roll over the amount but also done so at a cheaper interest rate of 1.5pc plus Shanghai Interbank Offered Rate (Shibor) instead of earlier 2.5pc plus Shibor.

However, in Wednesday's announcement, Ismail did not elaborate further on the agreement with the consortium.

'Bleak future'

This loan agreement between China and Pakistan also comes amid reports that Pakistan is blindly following Sri Lanka's path which will lead the country to fall into the Chinese debt trap. Pakistan's already fragile economy suffered another setback when recently China demanded repayment, by November 2023, of USD 55.6 million for the Lahore Orange Line Project, reported Italian publication Osservatorio Globalizzazione.

Meanwhile, at the end of March, the foreign exchange reserves held by the State Bank of Pakistan fell by a massive USD 2.915 billion, due to the repayment of external debt. Thus, Pakistan faces a bleak economic future as far as relations with China are concerned.

(To receive our E-paper on whatsapp daily, please click here. To receive it on Telegram, please click here. We permit sharing of the paper's PDF on WhatsApp and other social media platforms.)

RECENT STORIES

Mumbai Metropolitan Region records highest sales of approx 25,785 units in Q2 2022

Mumbai Metropolitan Region records highest sales of approx 25,785 units in Q2 2022

Uddhav Thackeray has lost fighting spirit: Former CM Prithviraj Chavan

Uddhav Thackeray has lost fighting spirit: Former CM Prithviraj Chavan

Daily Horoscope for Friday, July 1, 2022, for all zodiac signs by astrologer Vinayak Vishwas...

Daily Horoscope for Friday, July 1, 2022, for all zodiac signs by astrologer Vinayak Vishwas...

Mumbai cruise drugs case: Aryan Khan seeks passport back as exonerated in drugs case

Mumbai cruise drugs case: Aryan Khan seeks passport back as exonerated in drugs case

Navi Mumbai: NMMC area sees 190 new cases of Covid-19 on June 29

Navi Mumbai: NMMC area sees 190 new cases of Covid-19 on June 29