ISLAMABAD
Pakistan Wednesday signed a RMB 15 billion ($2.3 billion) loan facility agreement with a Chinese consortium of banks which is expected to aid the depleting foreign exchange reserves and depreciation of local currency.
Finance Minister Miftah Ismail announced the development on his Twitter handle, revealing that the inflows are expected within a couple of days. “We thank the Chinese government for facilitating this transaction,” he said.
Pakistan is likely to receive the loan in couple of days. Pakistan is currently facing a huge problem of depleting foreign reserves with US dollar thrashing Pakistani rupee continuously as it touched historic high of Rs212 on Wednesday.
Miftah Ismail said that a consortium of Chinese banks had signed the loan facility on Wednesday after Pakistan signed the document on Tuesday. The “inflow is expected within a couple of days. We thank the Chinese government for facilitating this transaction,” the finance minister said.
The announcement comes hours after a major breakthrough was reported in talks between the IMF and Pakistan government over the budgetary proposals.
The report created a positive sentiment in stock and money markets but it could not lost longer. The rupee closed lower in the intraday trading after making gains in the first session. The stock market too closed in the red.
China had deposited 15 billion Renminbi (RMB)(around US$102.2 billion) with the State Bank of Pakistan in March 2019 to bolster the country’s forex reserves. The Beijing government was expected to provide a rollover when the loan matured this year, but a rollover could not materialize and the Chinese banks withdrew the money from Pakistan.
After holding negotiations with Pakistani officials at several levels, the Chinese agreed to refinance the loan earlier this month, Miftah Ismail announced on June 2. However, the finance minister later admitted that the Chinese and other friends of Pakistan were not ready to transfer funds until Islamabad reached a deal with the IMF.
On the other hand, Pakistan and International Monetary Fund (IMF) reached a deal for the release of a US$1 billion tranche after the latter gave its nod to the budgetary adjustments for fiscal year 2022-23.
According to officials of the finance ministry, the Fund has agreed to the budgetary estimates set for the next fiscal year and the economic policies of the country. “The IMF will soon release a handout confirming the staff level agreement between the two sides,” they said.
