ISLAMABAD: China has rolled over $3.4 billion in loans to Islamabad, which, along with other recent commercial and multilateral lending, will boost Pakistan’s foreign exchange reserves to $14 billion, Reuters said, quoting a finance ministry source on Sunday.
Beijing rolled over $2.1 billion that has remained in Pakistan’s central bank reserves for the past three years, and refinanced another $1.3 billion commercial loan that Islamabad had repaid two months ago, the source added.
An additional $1 billion from Middle Eastern commercial banks and $500 million in multilateral financing have also been received, the source said.
“This brings our reserves in line with the International Monetary Fund [IMF] target,” he said.
The loans, particularly those from China, are critical for supporting Pakistan’s low foreign reserves, which the IMF required to exceed $14 billion by the end of the current fiscal year on June 30.
Pakistani authorities say the economy has stabilised due to ongoing reforms under a $7 billion IMF bailout.
The Express Tribune adds: During the week ended on 20th June, the State Bank of Pakistan (SBP) reserves decreased by $2.7 billion to $9.1 billion due to external debt repayments, mainly repayment of commercial borrowing, according to a statement that the central bank issued on Friday.
During the week ended on 20th June, the State Bank of Pakistan (SBP) reserves decreased by $2.7 billion to $9.1 billion due to external debt repayments, mainly repayment of commercial borrowing. – State Bank of Pakistan
During the current week, SBP has received commercial loans equivalent to $3.1 billion and multilateral loans of over $500 million, it added.
The foreign exchange reserves slipping to below $9 billion mark underscores the vulnerability of the fragile external sector stability. Heavy dependency on foreign borrowings should also be a matter of concern for the government.
The rupee-dollar parity has again started coming under pressure after the central bank went on a heavy buying spree, said the sources. There was also a shortage of foreign currency in the market, which was leading to depreciation of the rupee and compelling commercial banks not to open letter of credit for imports. Finance Minister Muhammad Aurangzeb has said that the foreign exchange reserves would close over $14 billion by the end of this fiscal year. Islamabad has also sought the rescheduling of the government’s concessional loans, preferential buyer credit, and the buyer’s credit from the Export-Import (Exim) Bank of China. China has not agreed to reschedule the buyer’s credit loans, they added.
China has shown willingness to reschedule $1.8 billion worth of government concessional loans and the preferential buyer credit by next month.
These loans have been taken for various projects and are over and above the commercial financing that Chinese banks have given to Pakistan.
