Pakistan’s Finance Minister Ishaq Dar said his country has received $700 million funds from the China Development Bank. The deposit comes as Pakistan has been struggling with its external debt and has barely enough dollars to cover less than three weeks’ worth of imports. Finance Minister Ishaq Dar referred to the deposit as a “lifeline” for Pakistan.
Significance of This Deposit by China to Pak:
The loan will bolster the country’s diminishing foreign exchange reserves, and the money is expected to arrive at the State Bank of Pakistan this week.
The coalition government has been trying to increase the country’s foreign exchange reserves, which currently stand at $3.25 billion as of February 17.
However, the delay in the revival of the $6.5 billion International Monetary Fund (IMF) programme has made it difficult for the government to achieve this goal.
Refinancing of Loans by Pakistan:
Pakistan is also looking to refinance two more commercial loans worth $500 million and $800 million. In total, Pakistan is aiming to refinance Chinese loans up to $2 billion by the end of February or the first week of March 2023.
This deposit from China is expected to ease some of the pressure on Pakistan’s economy, which has been struggling due to the pandemic and external debt.
Pakistan’s Total Debt:
Pakistan’s external debt servicing obligation for the ongoing fiscal year 2022-23 is $23 billion, of which $6 billion has been repaid and $4 billion rolled over, leaving $13 billion yet to be funded. The country also has further repayment obligations of $75 billion during FY24-26.