Tuesday, January 31, 2023
HomeMonetary PolicyPakistan Received $1.3 Billion Loan from China

Pakistan Received $1.3 Billion Loan from China

Pakistan received a $1.3 billion commercial loan from China to help Islamabad meet the foreign exchange reserve target of around $12 billion by the end of fiscal year 2019-20.

Experts said that the government agreed with the International Monetary Fund (IMF) to develop the country’s foreign currency reserves to around $12 billion by 30 June 2020 under the ongoing $6 billion loan programme.

The State Bank of Pakistan tweeted, “The SBP has received $1.3 billion as government of Pakistan loan disbursement from Chinese banks this week. This brings the total amount of official inflows received since June 23, 2020 to around $3 billion,”

Pakistan made substantial foreign debt repayments, which culminated in a $1.71 billion depletion of reserves in the week ended May 26, 2020. The payout has shocked financial analysts, who have called it the biggest repayment of commercial loans in more than a decade. We claimed that Islamabad had repaid a short-term loan to a Chinese commercial bank.

As per the central bank, the World Bank, the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB) paid a total of $1.75 billion in new loans to Pakistan. The government has borrowed large sums of foreign loans to pay off the loans previously received.

The SBP forecasted that Fitch Ratings said in a recent comment that Pakistan’s debt-to – GDP (gross domestic product) ratio would reach 89% and inflate its fiscal deficit to 9.5 per cent of GDP in the outgoing fiscal year (FY20) and 8.2% in the coming fiscal year.

Global lockdown placed to suppress coronavirus have had a major effect on the country’s balance of foreign payments, as export earnings have decreased dramatically and the collection of workers’ remittances has slowed since March. The government has repaid Rs5 trillion of loans in recent years and is planning to repay another Rs3 trillion.



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