ISLAMABAD: The State Bank of Pakistan has received $500 million of a $1.3 billion loan facility from the Industrial and Commercial Bank of China Ltd (ICBC), according to Finance Minister Ishaq Dar, bolstering the cash-strapped nation’s foreign exchange reserves.
Late Friday night, Dar stated in a message posted to Twitter that all formalities for the $1.3 billion loan had been completed and the Chinese bank had approved the rollover facility.
He stated that the money would be paid out in three installments, the first of which the central bank had already received.
The State Bank of Pakistan’s (SBP) foreign reserves has fallen to levels that are barely enough to cover three weeks of imports, according to the finance minister, who stated earlier in the day that the financing is essential for the country’s economy, which is experiencing a balance of payments crisis.
In order to increase its foreign exchange reserves, Pakistan has previously accepted a $700 million loan from the China Development Bank.
According to Dar, Pakistan is effectively borrowing back the $2 billion it has paid to China in debt repayments for previously approved loans.
He claimed that in order to bridge its funding gap this fiscal year, which ends in June, Pakistan would require $5 billion in outside funding.
Only after Islamabad enters into an agreement with the International Monetary Fund (IMF), which the minister claimed should be completed by next week, would Pakistan receive more outside funding.
Since early last month, the lender has been negotiating with Pakistan to resolve the ninth review, which, if authorized by its board, will release a tranche worth over $1 billion of the $6.5 billion bailout agreement made in 2019.
Dar dismissed worries about a default risk and asserted, “We will, God willing, lift this country out of this morass.