Pakistan ‘receives’ $700m from China amid economic crisis

KARACHI: Pakistan on Friday received $700 million from China as the foreign exchange reserves held by State Bank of Pakistan (SBP) registered a major boost amid ‘economic crisis’, ARY News reported, citing sources.

According to details, Pakistan received $700 million from the China Development Bank (CDB), following the institution’s board approving the facility.

Earlier on Feb 22, Finance Minister Ishaq Dar announced that the Board of the China Development Bank (CDB) has approved a loan facility of $700 million for Pakistan.

“This amount is expected to be received this week by State Bank of Pakistan which will shore up its forex reserves” tweeted Finance Minister Ishaq Dar.

Formalities completed and Board of China Development Bank has approved the facility of US $ 700 million for Pakistan. This amount is expected to be received this week by State Bank of Pakistan which will shore up its forex reserves!

— Ishaq Dar (@MIshaqDar50) February 22, 2023

A day earlier, the foreign exchange reserves held by State Bank of Pakistan (SBP) edged up by $66 million to $3.258 billion. However, the central bank gave no reason for the increase in reserves.

SBP’s foreign exchange reserves have increased by $66 million to $3,258.5 million as of the week ended February 17, which will provide an import cover of around three weeks.

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.

Read More: PM Shehbaz announces ‘inflation will increase after IMF agreement’

International Monetary Fund had (IMF) demanded a big increase in the interest rates to unlock the critical loan tranche — which will pave way for more funding.

Pakistan has been constantly pressurized to take important measures on time and the IMF demanded strict monetary policy which may result in the hike of interest rates as well.

Sources said that the State Bank of Pakistan (SBP) sold T-bills worth 258 billion USD on February 22 and the interest rate of the state bank is 17 percent.