ISLAMABAD: On Saturday, a media report said that China will provide USD 2.5 billion in loans to Pakistan to boost the foreign exchange reserves of its "all-weather ally". Pakistan is nearly broke with the drying up of foreign cash reserves and mounting external debt.
However The country's USD 8.12 billion reserves, which are below the minimum level that the International Monetary Fund (IMF) and the World Bank (WB) prescribe, are sufficient to cover only seven weeks of imports. Due to this, the WB and the Asian Development Bank are not providing loans for budget financing.
A top Finance Ministry official said that "Beijing will place the USD 2.5 billion in deposits with the central bank," With the anticipated USD 2.5 billion deposits, China's contribution in this fiscal year alone would surge to USD 4.5 billion.
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While Pakistan has struggled to uphold reserves that are not currently sufficient to provide cover to even two months of imports despite receiving USD 4 billion in loans from two Middle-Eastern countries. In July, China deposited USD 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.
While 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 USD 25 billion, he sought loans from other countries. And After coming into power, Prime Minister Imran Khan visited China, Saudi Arabia and the UAE to arrange emergency loans to avoid a looming default.
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