Chinese loan rollover worth $2bn in process: Govt source

A $2 billion Chinese loan to Pakistan that matured on March 23 is currently being rolled over, according to a government official.

Last week, China granted Pakistan a one-year rollover of $2 billion in State Administration of Foreign Exchange (SAFE) deposits that matured on March 23. With the country embroiled in failed talks with the International Monetary Fund (IMF) to secure bailout funding, the rollover is critical for the country’s foreign exchange reserves, which have dwindled to roughly a month’s worth of import cover.

Despite the looming threat of default on various external debt maturities, officials from Pakistan’s finance ministry recently expressed hope that the country would soon obtain financing from Saudi Arabia and the United Arab Emirates. They also stated that a $300 million payment from China was expected this month, bringing the country’s foreign reserves to $5 billion.

Also Read: Riyadh intent to provide more loan.

Pakistan had claimed a day earlier that it had received an indication from Saudi Arabia for additional loans that could help break the impasse with the IMF, and that it had no intention of exiting the $6.5 billion programme prematurely.

One of the IMF’s requirements is Net International Reserves (NIR), which can only be met after receiving assurances from friendly countries that a balance of payment gap will be filled.

Pakistan has assured the IMF that it will increase its foreign exchange reserves to $10 billion by the end of June. The lender wants up to $7 billion in guarantees to cover the country’s balance of payments gap this fiscal year.