You are here: Home » International » News » Economy
Business Standard

Pakistan signs $2.3-bn loan facility agreement with China to aid economy

Thanking the Chinese govt for 'facilitating this transaction', Pak FM said the 'inflow was expected within a couple of days'

Pakistan  | China

Press Trust of India  |  Islamabad 

Pakistan flag
Photo: ANI

on Wednesday signed a 15 billion yuan (USD 2.3 billion) loan facility agreement with a Chinese consortium of banks to help the country's cash-strapped in the wake of depleting foreign exchange reserves and depreciation of its local currency.

Finance Minister Miftah Ismail in a tweet said that the "Chinese consortium of banks has today (Wednesday) signed the RMB 15 billion (USD 2.3 billion) loan facility agreement after it was signed by the Pakistani side yesterday (Tuesday)".

Thanking the Chinese government for "facilitating this transaction", Ismail said the "inflow was expected within a couple of days".

Foreign Minister Bilawal Bhutto-Zardari also expressed his gratitude to the Chinese leadership. "The people of are grateful for the continued support of our all-weather friends," he said.

The loan agreement with Chinese banks will boost the crisis-hit 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 per cent 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 USD 9 billion as of June 10, with the level staying at less than six weeks of import cover.

The deal with also came on a day when reports emerged of Pakistan reaching an understanding with the Monetary Fund (IMF) to restore the stalled USD 6 billion assistance package from the global lender.

It will also prop up Pakistan's dwindling cash reserves which are at USD 8.99 billion, as per data from the central bank, the Dawn newspaper reported.

The deal with the IMF is expected to unlock doors for financing from other sources.

The revival of the facility will immediately provide access to USD 1 billion, which Pakistan badly needs to buttress its dwindling foreign exchange reserves.

The Finance Minister had last week warned that Pakistan's could be in a similar position as that of Sri Lanka if tough decisions were not taken.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, June 22 2022. 21:04 IST