Finance Minister Ishaq Dar has confirmed that the State Bank of Pakistan (SBP) has received $500 million of a $1.03 billion financing facility from the Industrial and Commercial Bank of China Ltd (ICBC) to bolster the cash-strapped nation’s foreign exchange reserves.
Dar announced on Twitter late Friday night that the Chinese bank had approved the rollover facility and that all $1.3 billion financing formalities had been completed.
He stated that the money would be distributed in three installments, the first of which had already been received by the central bank.
The foreign reserves of the State Bank of Pakistan (SBP) have fallen to levels barely sufficient to cover three weeks of imports, according to the finance minister, who stated earlier in the day that the financing is crucial for the country’s economy, which is experiencing a balance of payments crisis.
Pakistan has already obtained a $700 million loan from the China Development Bank to increase its foreign exchange reserves.
According to Dar, Pakistan is essentially borrowing back the $2 billion in debt repayments to Beijing for previously approved loans.
Pakistan, whose fiscal year ends in June, allegedly requires $5 billion in external funding to close its funding gap for the current fiscal year.
Pakistan will not receive additional outside funding until Islamabad agrees with the International Monetary Fund (IMF), which the minister said should be finalized by next week.
Since the beginning of last month, the lender has negotiated with Pakistan to conclude the ninth review. If its board approves, the lender will release a $1 billion tranche of the $6.85 billion bailout agreement reached in 2019.
Dar dismissed concerns regarding the possibility of a default by stating, “God willing, we will lead this country out of this dilemma.
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