Finance Minister Ishaq Dar announced on Wednesday that Pakistan’s all-weather ally China has approved a loan of USD 700 million, and the money will be sent to the central bank this week.
The loan announcement from China came a day after Pakistan’s National Assembly passed a money bill to increase tax revenues to meet the demands of the International Monetary Fund (IMF) for seeking a USD 1.1 billion loan facility to prevent an economic meltdown.
Dar tweeted, “Formalities have been completed, and the Board of China Development Bank has approved the facility of USD 700 million for Pakistan. This amount is expected to be received this week by the State Bank of Pakistan, which will shore up its forex reserves.”
Meanwhile, the government has announced several measures, including an austerity campaign to reduce inflation and economic crisis in the country. In addition, IMF had imposed measures to increase the revenue in order to meet the requirement set by the IMF.
Austerity measures include everyone, even the ministers, advisers, and bureaucrats, said Prime Minister Shehbaz Sharif on Wednesday.
Pakistan’s long-standing balance of payments issue has worsened over the past year as the country’s foreign exchange reserves have fallen to critically low levels. The central bank’s reserves were merely USD 3.2 billion as of February 10, barely enough to fund three weeks’ imports.
Furthermore, Pakistan’s cash-strapped country has also sought a loan from Saudi Arabia, trying to avert a financial crisis as the government works to restart the IMF programme.
