KARACHI: The State Bank of Pakistan (SBP) paid Rs26.1 billion in interest to the Chinese central bank during the last fiscal year (FY21) for utilizing $4.5 billion trade finance and finance investment under the bilateral currency swap, official data released on Friday showed.
A bilateral currency swap agreement (CSA) was signed between Pakistan’s central bank and the People’s Bank of China in December 2011 to promote bilateral trade, finance direct investment, provide short term liquidity support, and serve other mutually agreed financial purposes by the two banks.
The agreement was renewed in December 2014 for a period of three years with an overall limit of 10 billion Chinese Yuan (CNY) and an exchange rate equivalent of the Pakistani rupee.
The currency swap agreement was further extended in 2018 for a period of three years when the two sides mutually agreed to increase the amount from CNY10 billion to CNY20 billion, according to the financial statements released by the SBP.
“The [State] Bank had purchased and utilized CNY20 billion against PKR [Pakistani Rupee] during the year ended June 30, 2020, with the maturity buckets of three months to 1 year,” said the statement that also showed in tabulated form that Pakistan had paid Rs26.1 billion in interest to China in FY21. “During the year, the overall limit of CNY20,000 million has been further extended to CNY30,000 million ($4.5 billion) for a period of three years against PKR with the maturity buckets of three months to 1 year.”
The SBP report showed the country fully utilized the trade facility by the end of the last fiscal year.
“These purchases have been fully utilized by June 30, 2021. Interest is charged on outstanding balance at agreed rates,” it added.
The report showed the country had paid over Rs20.5 billion in interest on bilateral currency swap during the fiscal year 2020 when the country utilized $3 billion under the facility.
The value of the bilateral currency swap has increased from Rs475 billion in 2020 to Rs731.7 billion in 2021, when translated in rupee terms.
The Chinese trade and investment facility of $4.5 billion is part of the foreign exchange reserves held by the central bank.
The existing $17 billion worth of official foreign currency reserves have largely been built through borrowing, including from private commercial banks.
Pakistan has allocated over Rs3 trillion for debt servicing that also includes interest payments for the current fiscal year. The country has set a revenue collection target of Rs5.83 trillion for the current fiscal year.
However, higher debt servicing is leaving less funds for the country to spend on development initiatives at home.
“The cost of borrowed money is taking heavy toll both in terms of debt burden and debt servicing,” Dr. Ikram ul Haq, a Lahore-based tax expert, told Arab News.
“The payment to China for using running finances and paying other short-term loans is now proving to be disastrous,” he added. “It is widening fiscal deficit and bringing more burden due to the spike in dollar rate.”
Pakistan paid over Rs26 billion in interest to China last year under currency swap arrangement
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Pakistan paid over Rs26 billion in interest to China last year under currency swap arrangement
- The country’s central bank purchased $4.5 billion or CNY30 billion from China in the last fiscal year, official record shows
- The value of bilateral currency swap between the two countries has been increased from Rs475 billion in 2020 to Rs731.7 billion in 2021
Pakistan kills 11 militants in separate operations in western provinces
- Military says five Baloch separatist fighters were killed in an intelligence-based operation in Kohlu district
- Police say six Pakistani Taliban died in Lakki Marwat during a joint operation after drone attacks on homes
ISLAMABAD/PESHAWAR: Pakistani security forces and police killed at least 11 militants in separate counterterrorism operations in the country’s western provinces of Balochistan and Khyber Pakhtunkhwa, authorities said on Friday, highlighting the distinct insurgencies confronting the country along its border with Afghanistan.
In southwestern Balochistan, the military said it killed separatist militants in an intelligence-based operation in Kohlu District on Dec. 25, while police in the northwestern district of Lakki Marwat fought and killed the Pakistani Taliban.
Pakistan’s military said the Balochistan operation targeted fighters it identified as part of “Fitna al Hindustan,” a term authorities use for Baloch separatist outfits, including the Balochistan Liberation Army (BLA), which have waged a decades-long insurgency in the resource-rich province.
“During the conduct of operation, own forces effectively engaged the terrorists’ location, and after an intense fire exchange, five Indian sponsored terrorists were sent to hell,” the military’s media wing, Inter-Services Public Relations (ISPR), said in a statement, adding that weapons and explosives were recovered and follow-up clearance operations were underway.
In Lakki Marwat, police said counterterrorism units and local peace committees launched a coordinated operation against militants they described as “khwarij,” a term the Pakistani state uses for factions aligned with the Tehreek-e-Taliban Pakistan (TTP), an umbrella group of militants that primarily operates in Khyber Pakhtunkhwa.
According to police, six militants were killed and several others wounded during the operation, after authorities said militants had used drone-mounted devices to target residential homes, injuring civilians.
“Protection of life and property of the public is the police’s top priority, and strict, indiscriminate action against khwarij and other anti-peace elements will continue,” Bannu Region Deputy Inspector General Sajjad Khan said in a statement released by the regional police office.
The two operations highlight Pakistan’s parallel security challenges in its western regions.
In Balochistan, separatist groups accuse the federal government and military of marginalizing ethnic Baloch communities and denying them a fair share of the province’s mineral wealth, allegations Islamabad denies.
In Khyber Pakhtunkhwa, the TTP has intensified attacks on security forces and civilians since the Afghan Taliban’s return to power in Kabul in 2021.
Pakistan has repeatedly said these militant groups operating in both provinces receive backing from India and find shelter in Afghanistan, claims denied by New Delhi and Kabul.
Pakistani authorities said counterterrorism operations will continue nationwide under a campaign approved by the federal government to curb militancy and restore security.
