Pakistani Finance Minister Miftah Ismail said on Friday that a $2.3 billion loan from a Chinese consortium of banks had been credited to the central bank’s account.
Taking to Twitter, Ismail wrote, “I am pleased to announce that a Chinese consortium loan of 15 billion RMB (approximately $2.3 billion) has been credited to the account of the State Bank of Pakistan. (SBP) today, increasing our foreign exchange reserves.”
To cope with the country’s dwindling cash reserves, Ismail said earlier that a $2.3 billion loan from a Chinese consortium of banks in Pakistan was expected within “a few days”.
Notably, a Chinese consortium of banks and Pakistan had earlier signed a $2.3 billion loan facility agreement. In an update on the deal on Wednesday, Pakistani Finance Minister Miftah Ismail said cash inflows under the loan deal are expected within days.
Taking to Twitter, Ismail wrote, “The Chinese consortium of banks today signed the RMB 15 billion (~$2.3 billion) loan facility agreement after it was signed by the Pakistani side yesterday. The influx is expected in a few days. We thank the Chinese government for facilitating this transaction.”
Pakistani Foreign Minister Bilawal Bhutto Zardari wrote on social media: “I am grateful to President Xi Jinping, Foreign Minister Wang Yi and the Chinese people. The Chinese Consortium of Banks today signed the RMB 15 Billion Loan Facility Agreement, the people of Pakistan are grateful. for the continued support of our all-time friends.”
Pakistan is going through a deep financial crisis and this development comes after reports emerged of an agreement between Pakistan and the International Monetary Fund (IMF), according to the outlet. Ismail said that after a visit by Foreign Minister Bilawal Bhutto-Zardari and follow-up talks between Prime Minister Shehbaz Sharif and Prime Minister Li Keqiang, the Chinese side not only agreed to postpone the amount, but the also made at a cheaper interest rate of 1.5% plus the Shanghai Interbank Offered Rate (Shibor) instead of 2.5% previously. more Shibor.
However, in Wednesday’s announcement, Ismail gave no further details of the agreement with the consortium.
This loan deal between China and Pakistan also comes amid reports that Pakistan is blindly following Sri Lanka’s path, which will lead the country to fall into the Chinese debt trap. Pakistan’s already fragile economy suffered another setback when China recently demanded the repayment, by November 2023, of $55.6 million for the Lahore Orange Line project, Italian publication Osservatorio Globalizzazione reported. .
Meanwhile, at the end of March, foreign exchange reserves held by the State Bank of Pakistan fell by $2.915 billion, due to repayment of external debt. Thus, Pakistan faces a bleak economic future when it comes to relations with China.
(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)