Pakistan: The Industrial and Commercial Bank of China Ltd has agreed to renew a $1.3 billion loan for Pakistan, which is facing financial difficulties. The following information is as per Finance Minister of Pakistan, Ishaq Dar. This loan rollover will assist in strengthening the country’s dwindling foreign exchange reserves.
As per a tweet by Finance Minister Ishaq Dar, the $1.3 billion loan will be given to Pakistan in three parts. The initial instalment of $500 million has already been received by the country’s central bank. He stated that it would result in a rise in foreign exchange reserves.
According to Dar, the funds were paid back by Pakistan to the ICBC in the past few months. Money is extremely important for the South Asian economy, which is currently encountering a balance of payments crisis. The country’s central bank foreign exchange reserves have dropped to a level that can only cover imports for approximately three weeks.
China has already given Pakistan a loan of $700 million to enhance its foreign exchange reserves.
According to Dar, the entire $2 billion loan amount is essentially Pakistan borrowing back the debt payments it had made to Beijing for previous loans. He further stated that the country would require external financing of $5 billion to bridge the financing gap in the current fiscal year, which concludes in June.
The minister stated that additional external funding for Pakistan will only be accessible after Islamabad concludes an agreement with the International Monetary Fund (IMF). According to him, this deal should be completed by the upcoming week.
The lender has been in discussions with Pakistan since the beginning of the previous month to complete its ninth review. If approved by its board, this review would lead to the release of more than $1 billion of a $6.5 billion bailout that was agreed upon in 2019.
Dar expressed his confidence in resolving the situation and alleviating concerns of a default risk by stating, “We will, with the grace of God, resolve this crisis and take the country out of this troublesome situation.