In order to boost foreign exchange reserves, China to provide $2.5 billion loan to Pakistan

In order to boost official foreign exchange reserves of Pakistan, China has agreed to provide USD 2.5 billion as loans, reported the Express Tribune. 

According to the report, country’s USD 8.12 billion reserves, which are below the minimum level that the International Monetary Fund (IMF) and the World Bank (WB) prescribe, are sufficient to cover only seven weeks of imports.

“Beijing will place the $2.5 billion in deposits with the central bank,” a top government functionary told The Express Tribune. With the anticipated $2.5 billion deposits, China’s contribution in this fiscal year alone would surge to $4.5 billion.

In July, China had also deposited $2 billion with the State Bank of Pakistan. In the past five years, China has emerged as Pakistan’s single largest saviour in times of economic crisis.

The money is coming as part of the government’s strategy to secure breathing space till the time its macroeconomic stabilisation measures take effect.

After coming into power, Prime Minister Imran Khan had visited China, Saudi Arabia and the United Arab Emirates to arrange emergency loans to avoid a looming default.

As a result, Pakistan has secured $14.5 billion worth of commitments from these three countries that have helped largely bridged the external financing gap of the ongoing fiscal year.

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