Business

China agrees to provide $2.5 billion loan to Pakistan

China has agreed to provide $2.5 billion in loans to Pakistan to boost official foreign exchange reserves that are not sufficient to provide cover to even two months of imports despite receiving $4 billion loans from two Middle Eastern countries.
“Beijing will place the $2.5 billion in deposits with the central bank,”. With the anticipated $2.5 billion deposits, China’s contribution in this fiscal year alone would surge to $4.5 billion.
In July, China had also deposited $2 billion with the State Bank of Pakistan. In the past five years, China has emerged as Pakistan’s single largest saviour in times of economic crisis.The money is coming as part of the government’s strategy to secure breathing space till the time its macroeconomic stabilisation measures take effect.
After coming into power, Prime Minister Imran Khan had visited China, Saudi Arabia and the United Arab Emirates to arrange emergency loans to avoid a looming default.
Resultantly, Pakistan has secured $14.5 billion worth of commitments from these three countries that have helped largely bridged the external financing gap of the ongoing fiscal year.
Before coming into power, Khan was critical of taking loans to run the country but due to extremely low level of foreign currency reserves and financing requirements standing above $25 billion, the premier had to fly to Beijing and other capitals to seek loans.