China rolls over $700m loan to Pakistan: sources

ISLAMABAD: China has rolled over their deposit of $700 million with the State Bank of Pakistan (SBP) on the existing terms as Islamabad’s foreign exchange reserves escaped further decline, ARY News reported, citing sources.

According to details, the development was announced during a virtual meeting between officials of Ministry of Finance and Revenue and International Monetary Fund (IMF)

Sources told ARY News that Pakistan has apprised the Fund of the debt rollover from China’s bank.

During the meeting, the IMF demanded the implementation of recovery plan from electricity and gas defaulters. The Fund has demanded an immediate improvement on power losses.

Ishaq Dar meets Chinese Charge’d Affairs

Meanwhile, Federal Minister for Finance and Revenue Senator Ishaq Dar met Charge’d Affairs, Embassy of the People’s Republic of China, Ms. Pang Chunxue.

The two sides also discussed the progress on CPEC projects and resolved to accelerate and enhance mutual cooperation. They discussed about further deepening these ties in economic as well as financial sectors, the statement added.

On the occasion, the Finance Minister highlighted the long-standing and deep-rooted brotherly ties between both countries and shared that China and Pakistan have strong bilateral relations in a number of economic avenues.

He commended the support of Chinese leadership to Pakistan in its challenging times and shared various economic measures taken by the government to bring the economy on progressive path.

Ms. Pang Chunxue appreciated the policy steps taken by the government for sustaining and boosting the fiscal and monetary stability.

She shared good will gestures and assured the continuous support of Chinese government to Pakistan and added that her government stands with people of Pakistan and is willing to provide every possible assistance.

Foreign exchange reserves

Earlier in February, the State Bank of Pakistan’s (SBP) foreign exchange reserves witnessed an increase of $276 million to $3.193 billion after having maintained a declining trend in the last three weeks.

According to a statement issued by the central bank, the foreign exchange reserves held by the SBP were recorded at $3,192.9 million as of February 10, up $276 million compared with $2,916.7 on February 3.

Meanwhile, the net foreign reserves held by commercial banks stood at $5.5 billion, bringing the country’s total liquid foreign reserves to $8.7 billion. However, the central bank did not mention any specific reason behind an increase in SBP-held reserves.

Last week, the country’s foreign exchange reserves had fallen below Rs3bn on account of external debt payments.

Pakistan was eyeing to reach an agreement with the International Monetary Fund (IMF) that would not only lead to a disbursement of $1.2bn but also unlock inflows from friendly countries.

The International Monetary Fund (IMF) and Pakistan moved closer to the revival of $7 billion Extended Fund Facility (EFF) as the lender responded to the Memorandum of Economic and Financial Policies (MEFP) draft.

According to details, the Fund has responded to the Memorandum of Economic and Financial Policies (MEFP) draft – sent by officials of Ministry of Finance and Revenue.

Sources told ARY News that IMF and finance ministry held virtual talks today, adding that the ninth review to the revival of $7 billion Extended Fund Facility (EFF) will be completed soon.

Moreover, Global rating agency Fitch downgraded Pakistan’s long-term foreign currency issuer default rating (IDR) to ‘CCC-’ from ‘CCC+’.

In a statement, the agency said the downgrade reflects further sharp deterioration in external liquidity and funding conditions, and the decline of foreign-exchange (FX) reserves to critically low levels.

“While we assume a successful conclusion of the 9th review of Pakistan’s IMF (International Monetary Fund) programme, the downgrade also reflects large risks to continued programme performance and funding, including in the run-up to this year’s elections. Default or debt restructuring is an increasingly real possibility, in our view,” it added.