“The Chinese consortium of banks has today (Wednesday) signed the RMB 15 billion ($2.3 billion) loan facility agreement after it was signed by the Pakistani side yesterday (Tuesday),” said Federal Minister for Finance and Revenue Miftah Ismail on Twitter on Wednesday. He further said that inflow is expected within a couple of days. “We thank the Chinese government for facilitating this transaction,” he added.
Federal Minister for Foreign Affairs Bilawal Bhutto-Zardari has also acknowledged China for its support.
Bilawal wrote: “Grateful to President Xi Jinping, Foreign Minister Wang Yi and the people of China.” He further said that Chinese consortium of banks has today (Wednesday) signed the RMB 15 billion loan facility agreement, the people of Pakistan are grateful for the continued support of our all weather friends.
According to officials, China has agreed to reduce the interest rate on loan by one percent to 1.5 percent. The country desperately needs foreign inflow to build its foreign exchange reserves, which are depleting due to repayment against previous loans and financing of current account deficit.
The State Bank of Pakistan’s held foreign exchange reserves have dropped by $241 million to $9.0 billion as of June 10. The reserves hit their lowest level since November 2019 on the back of lack of external financing amid stalled IMF programme, high payments for oil imports, and pressure on foreign debt. The overall reserves held by the country fell to $14.9 billion from $15.2 billion previously. The reserves available with SBP are enough to cover less than two months of imports.
| Miftah says cash flow to start in a couple of days after which local currency to get strengthened against dollar
The local currency is under pressure due to the external sector position. On Wednesday, the local currency closed at an all-time low of 211.93 against the US dollar after losing 0.21% in the interbank market. Pakistani rupee had has depreciated by Rs30 in last several weeks due to pressure on the external sector and absence of foreign inflows amid suspension of loan programme of the International Monetary Fund (IMF).
The government is trying to revive the stalled IMF loan programme by accepting tough conditions. The revival of IMF programme would open venues for the government to receive loans from other bilateral and multilateral sources.
According to the ministry of finance officials, the country has projected to receive one billion dollars from the World Bank within current fiscal year (before end of June) in case the IMF programme revives. The government has also estimated to receive funds from Asian Infrastructure Investment Bank and $1.5 billion from the ADB in November this year. Around $8.9 billion are already in pipeline from World Bank. Saudi Arabia has agreed to give extension of its $3 billion, which is deposited in State Bank of Pakistan after the due date of end of December.
FM ‘grateful to’ Chinese leadership for continued support
Foreign Minister Bilawal Bhutto Zardari on Wednesday expressed gratitude to the Chinese leadership and the people of China for the RMB 15 billion loan facility agreement signed by the Chinese consortium of banks and the Pakistan side.
On his Twitter handle, the foreign minister expressed gratitude to Chinese President Xi Jinping, his Chinese counterpart Wang Yi and the people of China for their continued support. The people of Pakistan were grateful for the continued support of their all-weather friend.
“Grateful to President Xi Jinping, Foreign Minister Wang Yi and the people of China. Chinese consortium of banks has today signed the RMB 15 billion loan facility agreement, the people of Pakistan are grateful for the continued support of our all-weather friends,” the foreign minister posted a tweet.
Minister for Finance and Revenue Miftah Ismail, in a tweet, informed 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 a day earlier.