China’s RMB 15 billion loan facility agreement, a big relief for Pakistan

Gwadar Pro

Islamabad: Pakistan expects a big economic relief with the RMB 15 billion (US $2.3 billion) loan facility agreement by the Chinese consortium amid the financial crises, Finance Minister Miftah Ismail told Gwadar Pro.

Hours earlier, the Finance Minister tweeted that the Chinese consortium of banks had signed the RMB 15 billion ($2.3 billion) loan facility agreement on Wednesday, after it was signed by the Pakistani side yesterday (Tuesday). “Inflow is expected within a couple of days,” he added.

In his tweet, Miftah Ismail thanked the Chinese government for facilitating this transaction.

Speaking to Gwadar Pro, the Finance Minister mentioned the history of China’s support for Pakistan.

“They (China) have always been on time. These funds mean a lot to us at this time. We are working to reduce inflation and put the economy back on track,” he remarked.

Ismail was optimistic that within the next few months, the results of better economic policies will start to come.

“We (the government) hope to correct the wrong policies and return to a better economic position where the people will start getting the benefits,” he underlined.

The loan agreement with Chinese banks will boost the Pakistan’s reserves and enable Islamabad to make import payments while lending some support to the rupee as well.

The Pakistani rupee has lost over 34 percent since the beginning of the outgoing fiscal year 2021-22.

The latest development comes as a massive relief to economic policymakers after foreign exchange reserves held by the State Bank of Pakistan (SBP) fell below US $ 9 billion as of June 10, with the level staying at less than six weeks of import cover.

The agreement with China also came on a day when reports emerged of Pakistan reaching an understanding with the International Monetary Fund (IMF) to restore the stalled US $ 6 billion assistance package from the global lender.

It will also prop up Pakistan’s dwindling cash reserves which are at $ 8.99 billion, as per data from the central bank.

The deal with the IMF is expected to unlock doors for financing from other international sources.

The revival of the facility will immediately provide access to US $ 1 billion, which Pakistan badly needs to buttress its dwindling foreign exchange reserves.

Finance Minister Miftah Ismail had last week warned that Pakistan’s economy could be in a similar position as that of Sri Lanka if tough decisions were not taken.

On Wednesday afternoon, Foreign Minister Bilawal Bhutto Zardari also expressed gratitude to the Chinese leadership and the people of China for the RMB 15 billion loan facility agreement signed by the Chinese consortium of banks and the Pakistan side.

On his Twitter handle, the foreign minister expressed gratitude to Chinese President Xi Jinping, Chinese FM Wang Yi and the people of China for their continued support. “The people of Pakistan are grateful for the continued support of their all-weather friend,” he stated.