Islamabad:
Pakistan and China have signed agreements of equivalent commercial loans of $ 3.7 billion this week, withdrawing currency reserves to the two digits of the critically low level of $ 8.9 billion last week.
The agreements would also help comply with a commitment to the International Monetary Fund to close fiscal year 2024-25 with gross foreign exchange reserves of $ 14 billion.
Official sources told The Express PAkGazette that the Industrial and Commercial Bank of China (ICBC) and the Bank of China have signed a total of $ 1.6 billion agreements on Friday. The money will be disbursed on Monday, which is the last day of the current fiscal year.
At one stage, it seemed that China cannot sign the agreements of $ 1.6 billion this week, which resulted in an agitated rear door diplomacy. The sources said that the Vice Prime Minister Ishaq Dar played a fundamental role in the end of the agreements after the Ministry of Finance approached him.
Dar began chasing the Chinese authorities on May 19 that eventually led to the firm and disbursement of a commercial loan of $ 2.1 billion for a union of three Chinese commercial banks this week.
A RMB union financing loan of $ 2.1 billion or 15 billion for three Chinese commercial banks matured a few days ago, which reduced reservations to $ 8.9 billion, the sources said. Unlike the reinvestments of Chinese cash deposits of $ 4 billion, Chinese commercial loans must be paid first before they refine in new terms and conditions.
China has granted this money of $ 2.1 billion in RMB currency, which is also reflected in the foreign exchange reserves of the Central Bank. As a result, currency reserves increased to $ 12.4 billion on Friday, fountains said.
The Chinese Development Bank has granted 9 billion RMB, Bank of China 3 billion RMB and ICBC 3 billion RMB. The loan extends for a period of three years, government sources said.
There were still pending amounts of $ 1.6 billion, which were sliding to the next fiscal year. Ishaq Dar received on Friday the confirmation of the Chinese authorities that the two remaining commercial loans have also been completed and that the money will be disbursed very soon, the sources added.
In total, Pakistan and China have finished the commercial loan agreements of $ 3.7 billion in recent days. Friday’s 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 at floating interest rates, which resulted in around 7.5%.
The loan of $ 300 million of the Bank of China was also finished and will disburse in Chinese currency. Moving on offense loans from the US dollar is not specific to Pakistan, but is part of Chinese general politics to decoupling its American currency economy.
Pakistan continues to depend on Beijing to remain afloat, the friendly nation that constantly passes on cash deposits of $ 4 billion, $ 5.4 billion worth commercial loans and a commercial financing installation of $ 4.3 billion.
The non -Chinese foreign loan backed by ADB was also disbursed last week.
During the week ended on June 20, SBP reserves decreased by $ 2.7 billion to $ 9.1 billion due to external debt reimbursements, mainly the reimbursement of commercial loans, according to a statement that the Central Bank issued on Friday. During the current week, SBP has received commercial loans equivalent to $ 3.1 billion and multilateral loans of more than $ 500 million, he added.
Currency reserves fell to less than $ 9 billion brand underline the vulnerability of the fragile stability of the external sector. The great dependence on foreign loans must also be concern for the government.
The parity of Rupee-Dollar again began to be under pressure after the Central Bank made a large shopping spree, the sources said. There was also a shortage of foreign currency in the market, which led to the depreciation of the rupee and conventional commercial banks not to open a credit letter for imports.
The Minister of Finance, Muhammad Aurengzeb, said the foreign exchange reserves would close more than $ 14 billion for the end of this fiscal year.
Islamabad has also sought the reprogramming of the Government’s concessional loans, the preferential credit of the buyer and the credit of the Builder of the Export Bank (EXIM) of China. China did not agree to reprogram the buyer’s loans, they added.
China has shown the will to reprogram concessional loans worth $ 1.8 billion and the buyer’s preferential credit for next month. These loans have been taken for several projects and are above the commercial financing that Chinese banks have given to Pakistan.
