Cash strapped Pakistan has received a deposit of $700 million from the China Development Bank, which will provide a much-needed boost to the country’s foreign exchange reserves. 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 and said, by thanking God, that State Bank of Pakistan has received the deposit from China Development Bank on Twitter.
Earlier this week, Dar announced about the approval of loan facility for Pakistan and that the formalities had been completed. 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.
As per furthur news, in addition to this loan, Pakistan is also expecting a refinance of 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 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.
