Islamabad:
Pakistan and China signed commercial loan agreements equivalent to $ 3.7 billion this week, withdrawing exchange reserves with two figures from the extremely low level of $ 8.9 billion last week.
Transactions would also help respect a commitment with the International Monetary Fund to conclude the financial year 2024-25 with 14 billion dollars in exchange reserves.
Official sources told L’Express PK Press Club that the Industrial and Commercial Bank of China (ICBC) and the China Bank had signed a total of $ 1.6 billion on Friday. The money will be spent by Monday, which is the last day of the current financial year.
At one point, it appeared that China could not sign $ 1.6 billion transactions this week, which led to an eventful economic diplomacy of the stolen door. The sources have said that Darrier Ishaq Dar played an essential role in the finalization of agreements after his approach by the Ministry of Finance.
DAR began to continue the Chinese authorities on May 19, which finally led to the signing and disbursement of $ 2.1 billion in commercial loan by a union of three Chinese commercial banks this week.
A financing loan of the RMB union of $ 2.1 billion or 15 billion RMB by three Chinese commercial banks matured a few days ago, which reduced the reserves to $ 8.9 billion, the sources said. Unlike the Rollovers of Chinese cash deposits of $ 4 billion, Chinese sales loans must be reimbursed before them before they are not refined on new general conditions.
China gave this $ 2.1 billion in RMB, which is also reflected in the exchange reserves of the central bank. As a result, exchange reserves increased to $ 12.4 billion on Friday, the sources said.
China Development Bank has given 9 billion RMB, China Bank 3 billion RMB and ICBC 3 billion RMB. The loan is extended for a period of three years, said government sources.
There were still $ 1.6 billion waiting for amounts, which slipped into the next exercise. Friday, Ishaq Dar received confirmation from the Chinese authorities that the two remaining commercial loans were also finalized and that the money will be disbursed very soon, the sources added.
In total, Pakistan and China have finalized a value of $ 3.7 billion in commercial loans in recent days. The Friday agreement included a loan of $ 1.3 billion from the Industrial and Commercial Bank of China (ICBC). The ICBC had granted the loan two years ago to floating interest rates, which resulted in around 7.5%.
The loan of $ 300 million from the China Bank has also been finalized and will be disbursed in Chinese currency. The decision to delinate loans from the US dollar is not specific to Pakistan, it is rather part of the global Chinese policy to decouple its economy from the American currency.
Pakistan remains dependent on Beijing to stay afloat, the friendly nation that constantly exceeds cash deposits of $ 4 billion, $ 5.4 billion for commercial loans and $ 4.3 billion in commercial funding.
The non -Chinese foreign commercial loan supported by ADB was also disbursed last week.
During the week completed on June 20, SBP reserves decreased $ 2.7 billion to $ 9.1 billion due to reimbursements in external debt, mainly reimbursement of commercial loans, according to a statement that the central bank published on Friday. During the current week, SBP received commercial loans equivalent to $ 3.1 billion and multilateral loans over $ 500 million, he added.
Exchange reserves slipping at less than $ 9 billion highlight the vulnerability of fragile stability in the outside sector. Strong dependence on foreign loans should also be a matter of concern for the government.
Dollar rupee parity again started to put pressure again after the central bank has made a strong wave of purchase, the sources said. There was also a shortage of foreign currency on the market, which led to the damping of the Roupie and convincing commercial banks so as not to open the letter of credits for imports.
The Minister of Finance, Muhammad Aurangzeb, said that exchange reserves would close more than $ 14 billion by the end of this exercise.
Islamabad has also requested the postponement of government-government concessional loans, preferential buyer credit and credit from the Buyer of the Export-Importation (ICT) in China. China has not agreed to postpone the buyer’s credit loans, they added.
China has shown its desire to reprogram $ 1.8 billion in government concessional loans and preferential buyer credit next month. These loans have been contracted for various projects and exceed the commercial financing that Chinese banks have granted Pakistan.
