China Refinances $1 Billion Loan as IMF Window Closes
China has refinanced a $1 billion loan to Pakistan, which has increased the country’s declining reserves to over $4 billion once more, the State Bank of Pakistan reported on Friday.
As Pakistan had paid back the loan 18 days earlier after coming to an agreement to waive the prepayment penalty, Finance Minister Ishaq Dar stated on Friday that China will return the $1 billion commercial loans, according to Tribune.
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China reportedly released $1 billion on Friday, and $300 million in commercial debt will be refinanced soon, according to the reports. After paying $1 billion to China’s Development Bank on Monday, when the remaining $300 million was due by June 26th, State Bank’s foreign reserves fell below $3 billion.
Speaking to the Senate Standing Committee on Finance and Revenue, Dar said, “People should not be concerned about $100 billion external public debt repayments because Pakistan’s assets are solvent and worth more than $6 trillion.” He also urged people to quit talking about default and predicted that the currency rate will increase to Rs. 244.
Read More: SBP Reserves Cross $4 Billion Mark After Increase of $107 Million
Despite choking the economy, the cash-strapped nation is unable to close a $6 billion funding shortfall in time to finish the IMF’s 9th assessment. The IMF programme is set to expire on June 30 because the Finance Ministry’s last ditch effort to reach an agreement this week was unsuccessful.
The budget figures have drawn criticism from the IMF, particularly in regard to non-tax revenue, FBR tax collection, and a lack of attempts to increase the tax base. The IMF described it as a “missed opportunity,” but reaffirmed that the institution will continue to be involved in discussions about policy and stability.
The finance minister stated that additional IMF negotiations will be carried out by the incoming government before announcing the budget. Around October is when the elections are predicted to take place, and in order to prevent default, Pakistan needs to secure loans now.
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