To boost dwindling foreign exchange reserves, cash-strapped Pakistan has received $500 million from the Industrial and Commercial Bank of China Ltd (ICBC), Federal Minister for Finance and Revenue Ishaq Dar confirmed late on Friday.
The cash-strapped country faces mounting economic challenges, including inflation, declining foreign exchange reserves, widening current account deficits, and currency devaluation.
“The formalities have been completed [and] the Chinese bank, ICBC, has approved the rollover of the $1.3 billion facility that Pakistan has paid to ICBC in recent months,” the finance czar announced on Twitter.
He said that this facility will be given in three installments, the first amount of $500 million has been received by the State Bank of Pakistan.
“It will increase foreign exchange reserves!” Dar added.
Formalities completed & Chinese Bank, ICBC approved rollover of US$1.3 billion facility which has been repaid by Pakistan to ICBC in recent months. Facility will be disbursed in 3 instalments, first one of US$500 million has been received by SBP. It will increase forex reserves!
— Ishaq Dar (@MIshaqDar50) March 3, 2023
Foreign exchange reserves stood at $3.8 billion as of February 24, enough for less than a month’s worth of imports. While the country’s liquid foreign exchange reserves are about $9 billion, including net reserves of $5.5 billion with commercial banks.
Hours before his announcement, the finance minister revealed that China had renewed a facility under which Pakistan expected an additional $500 million inflow “over the next few days”.
Highlighting the economic achievements of the PDM-led government, Dar said foreign exchange reserves held by the State Bank increased to $3.8 billion from $2.8 billion recorded last month. He said that during the current financial year, the government repaid foreign debt of 6.5 billion dollars.
Pakistan has paid about $5.5 billion (excluding the payment of 1 billion sukuk). Of these, $2 billion has been given to China Development Bank and ICBC and $3.5 billion to banks in other countries.
“The debt is generally rolled over but the debt stock is not reduced. We are reducing the debt stock,” he said. “The formalities with ICBC were completed last night. We have returned $1.3 billion to it and the facility has been renewed and we will get the money back in three installments.
“We paid back $1.3 billion in three installments – $500 million, $500 million and $300 million. We will get it back in the same way. Pakistan will get $500 million in two-three days. We can get it on Monday. Then we will get another 500 million dollars in 10 days.
