‘Great Friend’ China approves 1.3 billion loan rollover for Pakistan
Ishaq Dar says 500 million received, another 500m will be delivered soon
March 4, 2023 09:54 AM
Federal Finance Minister Ishaq Dar has announced that Industrial and Commercial Bank of China Limited has approved a rollover of a $1.3 billion loan for dollar-strapped Pakistan which will surely help boost its dwindling foreign exchange reserves, reported 24NewsHD TV channel on Saturday.
In a tweet, the finance minister further said the loan will be disbursed in three instalments. The first one of $500 million has been received by the State Bank of Pakistan, he added.
Ishaq Dar said the Government had repaid the $1.3 billion loan to the ICBC in recent months. "It will increase forex reserves," he added.
Addressing a presser in Islamabad on Friday afternoon, Ishaq Dar hinted that Pakistan was expecting $1.3 billion in financing from the Industrial and Commercial Bank of China Ltd (ICBC) to help shore up its foreign exchange reserves. “All our formalities with the ICBC are complete as of last night. We returned them $1.3 billion in the last few months … they are giving it back and have renewed this facility,” Dar said, adding it was possible that $500 million in the next few days by Monday or Tuesday with a further $500m within 10 days. He said all documentation for the process was complete.
Regarding whether the country would default or not, Dar said: “We have never defaulted and we won’t now. Yes, we were in a precarious situation and are going through it currently.” He said the current government had made a “principled decision” whether to save the state or its own politics around the time of last year’s vote of no-confidence against Imran Khan.
Dar said the state’s interest was prioritised over political interests at the time, adding that it was the “right decision”.
He also attributed the financial losses arising from last year’s catastrophic floods as being majorly responsible for the country’s issues, adding that over $30 billion loss was suffered. “Our requirement for the next three to four years is for $16bn or Rs4,000bn.”
Dar also said that global inflationary pressure was a major reason for rising inflation in the country.
On foreign exchange reserves, Dar said they had reached $3.82 billion with the State Bank of Pakistan and combined with amounts held by commercial banks, came around to $9.26 billion. “There will be a further increase in this. I think China has given proof of great friendship,” he said.
Regarding the rupee’s depreciation against the dollar and reports of an artificial price cap, Dar said: “We did not release dollars into the market,” adding that there was no “question of us intervening or us having any capacity for it considering how low our reserves went”.
The minister said the government had a “roadmap” and policies for taking the country out of the current “quagmire”, adding, however, that they could not be made public. “I am confident that by June 30 we will take the State Bank’s reserves to $10 billion and national reserves near to $16 billion.”
Regarding the progress of negotiations with the International Monetary Fund for a bailout programme, Dar said all prior actions demanded by the Fund were fulfilled.
Dar’s presser comes a day after the Pakistani rupee hit a new low against the US dollar, the interest rate was raised by 300 basis points, and subsequent calls by the PTI for Dar’s resignation.