Cash-Strapped Pakistan To Receive $500 Million From Chinese Bank
A Chinese bank has assured Pakistan that it will provide another $500 million refinancing loan in the next few days, bringing total commercial loans to $1.7 billion out of a $2 billion total. committed, The News International reported.
Pakistani authorities are running from headquarters to headquarters to get 100% confirmation from donor-friendly countries and multilateral creditors before striking a staff-level agreement with the Money Fund. International Monetary Fund (IMF). The IMF put an unwritten condition that Pakistan must guarantee the refinancing of commercial loans as well as the rollover of deposits from China for the duration of the program, which is expected to expire on Jan. June 2023.
“Another $500 million commercial loan is coming from a Chinese bank,” a top Pakistani finance ministry official confirmed Wednesday, adding that the loan will be made available soon, The News International reported.
Chinese banks have provided $1.2 billion worth of commercial loans refinancing in the past few weeks, and Beijing has now offered assurances of another $500 million in refinancing in the past few weeks. next few days.
It is relevant to mention that Pakistan has also requested a rollover grant for China’s $2 billion SAFE deposit next month.
All of this, the refinancing of commercial loans and the renewal of SAFE deposits, is a prerequisite for the conclusion of the staffing agreement between the IMF and the Pakistani side.
Now, the Pakistani authorities are anxiously awaiting confirmation from the Kingdom of Saudi Arabia, the United Arab Emirates and Qatar, as well as from the World Bank and the Asian Infrastructure Investment Bank ( AIIB), on meeting their $6 billion worth of external financing needs through the end of June 2023, The News International reported.
Guarantees to secure external financing are crucial to the sustainability of the IMF program, as it is quite difficult for the State Bank of Pakistan to increase its foreign exchange reserves to $8-10 billion by the end of June 2023. . had predicted them at US$16 billion by August 2022, after completing the seventh and eighth assessments in the US$6.5 billion Extended Fund Facility.
It will be difficult for the staff of the IMF to defend the 50% reduction in foreign exchange reserves held by the State Bank of Pakistan (SBP) when there is no shock to the Pakistani economy externally. But Pakistani authorities argue that flash floods have hit parts of Pakistan, costing the economy $30 billion.
There is good news for the Pakistani economy: Brent crude fell to $74.39 and WTI light sweet oil fell to $68.16 per barrel in international markets.
Meanwhile, the IMF secretly launched “Inclusive Growth in the Middle East/North Africa Region (MENA)” at the National University of Science & Technology (NUST) on Wednesday, during which presentations of senior IMF officials, who argued that anywhere. state-owned enterprises (SOEs) have a large footprint, leading to crowding out the private sector.
Pakistan’s budget planners also assured the IMF that they will prepare a gender-based budget next fiscal year.
At a time when the IMF was focusing on inclusive growth in its published books, actually under the strict supervision of the IMF, the federal government’s development budget, known as the Public Sector (PSDP), has been cut by $50 per year. cents for the current fiscal year in line with the Fund’s need to reduce the budget deficit target.
In response to the IMF’s request, inflation based on the Consumer Price Index (CPI) and Price Sensitive Index (SPI) rose to unprecedented levels of 31.5% per month and 42.3% per week. .
(Except for the title, this story has not been edited by NDTV staff and is published from an aggregated feed.)