China’s RMB 15 billion loan facility agreement, big relief for Pakistan
ISLAMABAD, June 23: Pakistan expects a big economic relief with the RMB 15 billion (~ $2.3 billion) loan facility agreement by the Chinese consortium amid the financial crises, Finance Minister Miftah Ismail told Gwadar Pro on Wednesday evening.
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 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.
The loan agreement with Chinese banks will boost 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 $ 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 $ 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 IMF is expected to unlock doors for financing from other international sources.
The revival of the facility will immediately provide access to $ 1 billion, which Pakistan badly needs to buttress its dwindling foreign exchange reserves.