To boost foreign exchange reserves, Finance Minister Ishaq Dar on Wednesday announced that the board of China Development Bank has approved a $700 million facility for Pakistan.
“This amount is expected to be received by the State Bank of Pakistan this week which will increase its foreign exchange reserves!” Finance Minister Dar tweeted, adding that the formalities have been completed.
Formalities completed and Board of China Development Bank has approved the facility of US $ 700 million for Pakistan. This amount is expected to be received this week by State Bank of Pakistan which will shore up its forex reserves!
— Ishaq Dar (@MIshaqDar50) February 22, 2023
The loan was expected as sources indicated that funds would be available.
On the issue of refinancing commercial loans from Chinese banks, a senior government official told JEE News that they are hopeful that all Chinese matured loans will be refinanced soon.
However, two more commercial loans involving $500 million and $800 million were expected to be refinanced, according to official sources.
So in total, Pakistan is looking to refinance Chinese debt of up to $2 billion by the end of February or the first week of March 2023.
Pakistan is stuck in a serious payments crisis and needs to secure a $1 billion tranche from the International Monetary Fund (IMF) under a $6.5 billion Extended Fund Facility.
One of the demands of the international lender was that Pakistan needed to secure additional external financing channels.
Apart from this, the IMF is also demanding Pakistan to remove excess electricity surcharges and increase the policy rate.
