ISLAMABAD: Within next few days Pakistan will receive $2.3 billion from China as Chinese banks have agreed to refinance the said amount in debt that will boost dwindling foreign exchange reserves of Pakistan.
Finance Minister Miftah Ismail shared this good news with people through Twitter.
Taking to his Twitter handle, he said, “The terms and conditions for refinancing of RMB 15 billion deposit by Chinese banks (about US$ 2.3 billion) have been agreed.”
Inflow is expected shortly after some routine approvals from both sides. This will help shore up our foreign exchange reserves, he added.
According to State Bank of Pakistan, the liquid foreign exchange reserves of the SBP have dropped below $10 billion in the last week of May because of $366 million payment of foreign loans.
The total reserves with the central bank have dropped to $9.722 billion as of May 27, 2022, while the commercial banks hold $6.048 billion reserves. The SBP’s reserves are equal to six weeks imports of Pakistan. Total national reserves are at $15.771 billion as of May 27, the lowest since Nov 2019.
Finance Minister also said that Saudi Arabia is also finalizing the extension of the KSA’s $3 billion deposit to Pakistan. In 2021, Saudi Arabia deposited $3 billion in Pakistan’s central bank to help support its foreign reserves.
At present, Pakistan is in dire need of external finances as reserves are depleting fast. Due to declining reserves, the country is facing severe consequences on the economic front in terms of losing investors’ confidence.
On Thursday night, the government took two major decisions _ further increase petrol prices by Rs 30 per liter and also enhanced power tariff by Rs7.90 per unit to fulfill the key demands of IMF to ensure the fund approves the disbursement of next tranche as early as possible.
In recent talks with IMF, the fund had emphasized the need of removing fuel and energy subsidies to avail the next tranche under the Extended Fund Facility (EFF) program.
However, after receiving the funds from China, Saudia, and IMF, Pakistan’s external outlook will become stable once again.
