China’s support helps in stabilizing Pakistani financial position

Islamabad: China’s economic support over the weekend had helped in stabilizing the Pakistani financial position.

Over the weekend, the State Bank of Pakistan (SBP) received back third and last disbursement in its account amounting to US $ 300 million from Industrial and Commercial Bank of China (ICBC), which strengthened local foreign exchange reserves.

With the receipt of US $ 300 million, Chinese financing will amount to US $ 2 billion in the past almost two months. This is in addition to the rollover of another US $ 2 billion loan by Beijing. The inflows have not only improved Pakistan’s forex reserves but have also provided support to the rupee, financial experts said.

The Pakistani currency also maintained its uptrend for the third consecutive working day, regaining 0.18%, or Rs0.51, to a two-week high at Pakistani Rs 284.40 against the dollar in inter-bank market over the weekend.

In the past three days, the currency recovered 1.42%, or Rs4.03, compared to the all-time low of Rs 288.43/$ hit on April 11, 2023.

On Friday, Minister for Finance and Revenue Senator Muhammed Ishaq Dar tweeted that “out of Chinese Bank’s ICBC approved facility of US $1.3 billion (which was earlier repaid by Pakistan), State Bank of Pakistan would receive back third and last disbursement today in its account amounting to $ 300 million. It will shore up forex reserves of Pakistan.”

Pakistan has announced financial support from the United Arab Emirates and China totalling $1.3 billion, giving the ailing economy a shot in the arm as it seeks to meet conditions for the resumption of an International Monetary Fund bailout.

China released US $300 million to Pakistan – the last tranche of a $1.3 billion rollover loan.

Pakistan had signed a US $ 6.5 billion bailout package with the International Monetary Fund (IMF) in 2019, but has repeatedly reneged on conditions and so far just US $ 3 billion has been released.

Pakistan’s economy has crumbled alongside a simmering political crisis, with the rupee plummeting and inflation at decades-high levels.

The country’s hopes for another round of IMF funding also depend on friendly countries rolling over existing loans or providing additional support.