ISLAMABAD: Pakistan’s finance minister Miftah Ismail said on Thursday his country had reached an agreement over the terms and conditions with Chinese banks to refinance an amount of nearly $2.3 billion.
Pakistan has been facing a massive current account deficit and desperately needs external financing amid a mounting import bill and depleting foreign exchange reserves.
The country was financially rescued by friendly nations like China, Saudi Arabia and the United Arab Emirates that deposited billions of dollars in its central bank to prop up its forex reserves.
The government recently paid back approximately $2.3 billion to China, though it later demanded its rollover as the economic crisis prolonged in the country.
“The terms and conditions for refinancing of RMB 15 billion deposit by Chinese banks (about $ 2.3 billion) have been agreed,” the finance minister announced in a Twitter post. “Inflow is expected shortly after some routine approvals from both sides.”
“This will help shore up our foreign exchange reserves,” he added.
Ismail also held meetings with officials of the World Bank and International Monetary Fund (IMF) in April soon after the arrival of the new government.
He asked the IMF management for the resumption of a loan program amounting to $6 billion while urging it to increase its size to $8 billion extend its duration for another year.
So far, the international lending agency has not released the next loan installment of about $1 billion, though the government has tried to meet some of its key conditions by raising fuel prices and power tariffs.
Ismail said in April he was keen to secure the IMF deal since it would also help Pakistan unlock external financing from other multilateral donors.
Financial experts also maintain the government is not likely to get requisite support from other countries, including China, without the resumption of the IMF loan.