ISLAMABAD:
Pakistan announced on Thursday that he reached a deal with China for $2.3 billion commercial loan, first major foreign inflow in recent months and testifies to Beijing’s renewed commitment to financial viability of Islamabad.
Chinese government It has also withdrew its condition that Pakistan cannot use revenue of $2.3 billion commercial loan. it also agreed with reduce interest rate on loan by 1% to about 3.8%. It gave a breath of assistance to the Ministry of Finance, which lobbied for two months to get back loan he repaid in March it year.
“Good news: terms and conditions for refinancing of A deposit of 15 billion yuan (about $2.3 billion) from Chinese banks has been agreed,” Finance Minister Miftah Ismail tweeted. on Thursday.
He said the influx is expected shortly after some routine approvals from both sides, which help Coast up foreign exchange reserves.
Pakistan repaid a $2.3 billion commercial loan. in March in hope to get it back in April. But China set the condition that money cannot be used due to weakening of external sector position of Pakistan.
Pakistan may use in money said Ismail, adding that Foreign Minister Bilawal Bhutto and Prime Minister Shehbaz Sharif played role convince China to extend the loan.
In March 2019, the China Development Bank extended commercial loan for three years in six-Monthly Chinese Shanghai Interbank Offered Rate (SHIBOR) plus 2.5%. BUT senior Ministry of Finance official said Beijing agreed reduce in rate by 1%.
AT current 6 month SHIBOR rate of 2.32% + 1.5%, lending rate is now around 3.8%, better than Saudi Arabia. for its deposits of $3 billion.
It was a major influx of foreign exchange that took away foreign exchange reserves. back to double numbers. Reserves fell to $9.7 billion. last a week.
During first 10 months of in current fiscal yearPakistan received amount of $2.6 billion in foreign commercial loans from banks. Now it will jump about 5 billion dollars.
Overall, Pakistan received $15.5 billion. in loans from foreign lenders for July-April of current fiscal year. About 85% of in new gross foreign loans were used to overcome budget deficit and supporting foreign exchange reserves, which remain at a critically low level of $10.2 billion.
Ismail hoped that the revival of IMF loan will meet Pakistan’s gross financing needs issue which are estimated at about $36 billion until June next year.
Mudis is international credit rating agency, on Thursday confirmed the rate of national and foreign currency B3 of Pakistan debt ratings, but changed outlook from stable to negative.
decision Outlook changed to negative on Pakistan’s heightened external vulnerabilities risk, according to Moody’s. This indicated uncertainty about the sovereign. ability secure additional external funding to meet their needs.
Meanwhile, central Pakistan bank said on On Thursday, its liquid foreign exchange reserves fell $366 million to $9.7 billion.
In the week to May 27, reserves decreased due to external
debt redemption, bank said in statement.
The total liquid foreign exchange reserves amounted to $15.7 billion. of which commercial banks held six billion.
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