Cash-strapped Pakistan has received USD 1 billion from its close ally China to supplement its critically low foreign reserves amid uncertainties over the revival of a stalled International Monetary Fund loan.
The State Bank of Pakistan (SBP) confirmed receiving the funds from China on Friday night but provided no other details. It would add to the reserves, which had shrunk to about USD 3.9 billion in recent weeks.
Earlier, finance minister Ishaq Dar stated that Pakistan had paid back USD 1 billion to China on Monday, against a due amount of USD 1.3 billion, adding that the money will be restored.
Pakistan’s economy is on the edge of default as the IMF presses the country to meet conditions that Islamabad maintains have already been addressed to provide the remaining USD 2.5 billion from a bailout package of USD 6.5 billion agreed upon in 2019.
The entire amount is unlikely to be paid because the project ends on June 30, but Pakistan is asking for USD 1.1 billion as a symbolic gesture of endorsement of its policies by the Washington-based fund.
Without the IMF’s assistance, the country cannot obtain multilateral assistance. Only China has been firm in its support for Pakistan, while Saudi Arabia and the UAE have also been selectively supportive.
Dar has previously lashed out at the IMF, alleging that its loan package was motivated by geopolitics, with global institutions wanting Pakistan to default like Sri Lanka and then enter discussions.
Pakistan is frantically looking for a way to keep its economy afloat in the absence of IMF assistance.
Dar’s policy choice indicates that Pakistan will pay multilateral loans on schedule while considering bilateral loan rollovers with individual countries.
It is envisaged that China would roll over USD 4 billion of bilateral loans as the country anticipates rolling over approximately USD 9 billion in loans with other nations in the new fiscal year, which begins July 1.
Pakistan is also considering refinancing a USD 300 million loan from the China Development Bank, which is set to mature on June 30.
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