Finance Minister Ishaq Dar reported on Wednesday that Pakistan’s $700 million facility had been authorised by the Board of the China Development Bank, adding to the country’s foreign exchange reserves.
Finance Minister Dar tweeted, “This sum is expected to be received this week by State Bank of Pakistan, which will shore up its foreign reserves,” adding that all processes had been fulfilled.
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
The loan was an addition to other facilities China has already provided to Pakistan, a finance ministry official told.
One high-ranking government official told that they were optimistic that all Chinese loans that had matured will be refinanced quickly with regard to the re-financing of commercial loans from Chinese banks.
Two more commercial loans, worth $500 million and $800 million, were anticipated to be refinanced, however, according to official sources.
Pakistan is therefore hoping to restructure Chinese loans totaling up to $2 billion by the end of February or the first week of March 2023.
The $1 billion tranche under the $6.5 billion Extended Fund Facility from the International Monetary Fund must be secured by Pakistan in order to escape its grave balance of payments crisis (IMF).
Pakistan was required to find new sources of outside funding, which was one of the conditions set by the international lender.
Along with these demands, the IMF is pressuring Pakistan to raise its policy rate and impose further electricity surcharges.