To cope with the country’s dwindling cash reserves, a $2.3 billion loan from a Chinese consortium of banks in Pakistan is expected within “a few days”.
Notably, a Chinese consortium of banks and Pakistan had earlier signed a $2.3 billion loan facility agreement. In a final update on the deal on Wednesday, Pakistani Finance Minister Miftah Ismail said cash inflows under the loan deal are expected within days, local Pakistani media reported. dawn.
Taking to Twitter, Ismail wrote, “The Chinese consortium of banks today signed the RMB 15 billion (~$2.3 billion) loan facility agreement after it was signed by the Pakistani side yesterday. The influx is expected in a few days. We thank the Chinese government for facilitating this transaction.”
Pakistani Foreign Minister Bilawal Bhutto Zardari wrote on social media: “I am grateful to President Xi Jinping, Foreign Minister Wang Yi and the Chinese people. The Chinese Consortium of Banks today signed the RMB 15 Billion Loan Facility Agreement, the people of Pakistan are grateful. for the continued support of our all-time friends.”
Pakistan is going through a deep financial crisis and this development comes after reports emerged of an agreement between Pakistan and the International Monetary Fund (IMF), according to the outlet.
Ismail said that after a visit by Foreign Minister Bilawal Bhutto-Zardari and follow-up talks by Prime Minister Shehbaz Sharif with Prime Minister Li Keqiang, the Chinese side not only agreed to postpone the amount, but also done at a cheaper interest rate. 1.5 pc plus the Shanghai interbank offered rate (Shibor) instead of 2.5 pc plus the Shibor.
However, in Wednesday’s announcement, Ismail gave no further details of the agreement with the consortium.
This loan deal between China and Pakistan also comes amid reports that Pakistan is blindly following Sri Lanka’s path, which will lead the country to fall into the Chinese debt trap. Pakistan’s already fragile economy suffered another setback when China recently demanded the repayment, by November 2023, of $55.6 million for the Lahore Orange Line project, Italian publication Osservatorio Globalizzazione reported. .
Meanwhile, at the end of March, foreign exchange reserves held by the State Bank of Pakistan fell by $2.915 billion, due to repayment of external debt. Thus, Pakistan faces a bleak economic future when it comes to relations with China.
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