The State Bank of Pakistan (SBP) on Friday confirmed that China had provided it with $1 billion in refinancing though it did not offer any further details about the inflow.
The refinancing is being seen as a major boost to foreign exchange reserves, which the central bank earlier announced had declined to $9.38 billion on June 9, including $5.36 billion held by commercial banks and $4.02 billion by the SBP. The sum is also equivalent to the $1.1 billion tranche of the International Monetary Fund (IMF) that Pakistan would receive if it secures the revival of a stalled $6.5 billion bailout. With the $1 billion included, Pakistan’s forex reserves are estimated to have increased to $10.38 billion, but it is unclear if the country has repaid additional debts since June 9.
The announced followed an earlier briefing by Finance Minister Ishaq Dar to the National Assembly Standing Committee on Finance and Revenue in which he had said that China would be refinancing the $1 billion loan it had given to Pakistan earlier. “$1 billion will come from China today or on Monday,” he had said, adding talks were also underway for a loan of $300 million from the Bank of China.
Pakistan is currently striving to revive the stalled IMF program, which is set to expire on June 30. The bailout is considered key to averting default and has been pending since November, with the lender demanding the country arrange $6 billion in financing from “friendly” nations; maintain a market-determined exchange rate; and remove all untargeted subsidies and tax exemptions.