China has rolled over $3.4 billion of loans to Pakistan, giving a much-needed injection to the foreign exchange reserves of the country before the end of the fiscal year, a top Pakistani finance ministry official informed Reuters on Sunday.
The new funds also consist of $2.1 billion that was lodged in the State Bank of Pakistan reserves over the last three years, which is now officially rolled over. An additional $1.3 billion commercial loan which Pakistan paid back two months ago has also been refinanced by China, confirmed the official.
In addition to the Chinese assistance, Islamabad has arranged an extra $1 billion from Middle Eastern commercial banks and $500 million from multilateral sources. The total inflows will lift Pakistan’s foreign reserves to about $14 billion exceeding the target International Monetary Fund (IMF) as part of its extended loan deal.
These inflows put our reserves in conformity with the IMF target,” the official, who wished to remain unnamed, said.
The IMF had already required Pakistan’s reserves to be more than $14 billion by June 30, the end of its current financial year. The extension of Chinese funding is viewed as critical to achieving that objective, maintaining economic stabilisation efforts.
Pakistani authorities claim that the economy has started picking up, courtesy of structural changes and fiscal prudence imposed by the IMF’s $7 billion bailout program. The nation has been depending on strategic fiscal aid from allies and lenders to cover external debt servicing and stabilize its macroeconomic prospects.