Islamabad:
Pakistan has reimbursed a Chinese commercial loan of $ 1 billion on the understanding of its refinancing soon, which temporarily lowered the thin exchange reserves of the country to a six -month of $ 10.6 billion.
The government has rendered the loan of $ 1 billion from the Industrial and Commercial Bank of China (ICBC) in two equal tranches this month, the Pakistani authorities said. The ICBC had granted the loan two years ago to floating interest rates, which translates approximately 7.5%.
The sources have indicated that another $ 300 million loan slice by the ICBC would mature in the middle of next month. The government will also withdraw $ 300 million in April, they added.
Due to the reimbursement of the second tranche of $ 500 million during the third week of March, the central bank reserves fell to $ 10.6 billion. This lowered the gross official exchange reserves at the lowest level of six months.
The first tranche of $ 500 million had been paid in the first week of March and the central bank committed the gap by buying dollars on the market and on the back of certain foreign entries.
The Governor of the Central Bank said earlier that his institution had bought $ 9 billion from the market to build exchange reserves in 2024. Without these purchases, the reserves would not have been $ 2 billion despite the international monetary fund.
The Ministry of Finance hoped that the ICBC would refinance the installation. They said that the discussions have already started but have not yet reached the point of determining interest rates.
Pakistan depends strongly on Beijing to stay afloat, the friendly nation that constantly exceeds cash deposits of $ 4 billion, $ 6.5 billion for commercial loans and $ 4.3 billion in commercial funding.
The additional $ 2.7 billion in Chinese sales loans mature from April to June this year. A union financing loan of $ 2.1 billion by three Chinese commercial banks matured in June. In addition, the 300 million dollars of the China Bank will also mature during the same month, that Pakistan must be refined to keep the reserves at their minimum critical levels.
The country still depends strongly on fresh foreign loans and the rolling and refinancing of the existing debt to avoid a race on its reserves. Unlike the past, the IMF program has not contributed to obtaining major foreign funding.
Pakistan and the IMF have entered into a staff level agreement at the end of the first revision of the funding of funds extended this week. The approval by the Council of the Agreement will result in the release of the $ 1 billion tranche.
However, the time of the meeting of the IMF board of directors remains uncertain for exogenous and native reasons. The board of directors can resume the case of Pakistan in May or June. There is a desire to conclude the first exam and pay the edge before the end of June.
In the event that the meeting of the IMF board of directors slips in June, the IMF staff could first consult and approve the budget for the financial year 2025-2026.
There are many areas that remain open to discussions, in particular the imposition of the real estate sector, drinks and tobacco. The IMF is not inclined to reduce taxes on properties on properties within the framework of its opinion to move investments in speculative sectors to productive sectors of the economy.
Pakistan also asked China last month to reprogram $ 3.4 billion in debt for two years to fill a foreign funding difference identified by the IMF. The request had been made to the import export (Exim) Bank of China to consider the rearrangement of its falling loans from October 2024 to September 2027.
The Ministry of Finance has not yet officially disclosed the status of the request. Pakistan is required to identify funding sources to fill the external financing difference of $ 5 billion for the three -year IMF program.
During the recent reviews of the journal, the IMF agreed that the external sector had been stabilized, but at the same time, it declared that the vulnerabilities remain which can be treated by the combination of narrow tax and monetary policies and flexibility of the exchange rate.
Rupes-dollas parity has remained widely stable during this exercise, although a certain depreciation in the past few days. Thursday, parity in dollars closed at Rs280.2.
