ISLAMABAD, Pakistan – Pakistan received a $2.3 billion Chinese consortium loan that will help stabilize its fast-depleting foreign reserves, finance minister Miftah Ismail said on Friday, as country continue to look towards the International Monetary Fund (IMF) to restore a $6 billion package agreed upon in 2019.
So far half of the promised money had been given, and yet the two sides have to come up to an agreement.
Foreign exchange reserves held by the central bank have fallen to as little as $8.2 billion, and the Pakistani rupee is at record lows against the U.S. dollar, with $1 equal to 206.7500 Pakistani rupees.
“I am pleased to announce that Chinese consortium loan of RMB 15 billion (roughly $2.3 billion) has been credited into SBP (State Bank of Pakistan) account today, increasing our foreign exchange reserves,” minister Ismail said in a tweet.
Pakistan entered agreed a 39-month IMF programme in 2019, but less than half its $6 billion size has been disbursed as Islamabad has struggled to keep targets on track.
On Friday, the government announced it would impose a one-year, 10 per cent tax on large-scale industry to raise over 400 billion Pakistani rupees ($1.93 billion) as it tries to unlock a new tranche of IMF funds to avert a balance of payments crisis, as local media reported.
Earlier this month, China agreed to refinance Pakistan with USD2.3 billion worth of funds amid dwindling foreign exchange reserves of the country.
“Good News: The terms and conditions for refinancing of RMB 15 billion deposit by Chinese banks (about US$ 2.3 billion) have been agreed,” said Miftah Ismail, Pakistan’s Federal Minister of Finance and Revenue, in a tweet.
“Inflow is expected shortly after some routine approvals from both sides. This will help shore up our foreign exchange reserves.”
Pakistan’s foreign exchange reserves are under severe stress and declined by $190 million to $10.308 billion during the week ended on May 6, according to the State Bank of Pakistan (SBP).
The country is heavily dependent on foreign loans, as the Ministry of Economic Affairs data earlier this month showed that Pakistan received only $248 million in foreign loans in April, including $100 million worth of oil on deferred payments from Saudi Arabia.