ISLAMABAD, Pakistan – Pakistan has secured roughly $13 billion in additional financial support China and Saudi Arabia, Finance Minister Ishaq Dar said, as the country continued to struggle to stabilize its dwindling economy since early this year.
According to Dar, Pakistan would be getting about $9 billion from China and $4 billion from Saudi on top of assurances for about $20 billion in investments.
During Prime Minister Shehbaz Sharif’s recent visit to Beijing, the Chinese leadership promised to roll over $4 billion in sovereign loans, refinance $3.3 billion commercial bank loans and increase currency swap by about $1.45 billion – from 30 billion yuan to 40 billion yuan, as The Economic Times reported.
“They promised the security of financial support,” Dar, who recently took over as the new finance minister of Pakistan from his predecessor Miftah Ismail, said and quoted Chinese President Xi Jinping as telling Sharif, “don’t worry, we will not let you down”.
Meanwhile, Dar said Saudi Arabia had also “given a positive response” to Pakistan’s request for increasing its financing by another USD 3 billion to USD 6 billion and doubling its deferred oil facility of USD 1.2 billion, the report said.
The two heads worked out at USD 4.2 billion and the finance minister said there was no delay except a month or so of processing time, the report said.
Pakistan had been engaging with China and Saudi Arabia for financial support, including rolling over maturing loans as part of arrangements for about USD 35 billion putouts against debt and liabilities during the current fiscal year.
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In September, Saudi Fund for Development extended a $3 billion deposit placed in Pakistan’s central bank accounts for one year, which financial experts say could boost investor confidence in the South Asian economy.
“Saudi Fund for Development (SFD) has confirmed rollover of $3bn deposit maturing on 5Dec22 for one year,” the central bank wrote on Twitter.
“Deposit is placed with SBP and is part of its forex reserves,” the bank further wrote. “This reflects continuing strong and special relationship between the Kingdom and Pakistan.”
In June, Pakistan received a $2.3 billion Chinese consortium loan that will help stabilize its fast-depleting foreign reserves, as country continue to look towards the International Monetary Fund (IMF) to restore a $6 billion package agreed upon in 2019.
“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’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.
