China’s Rescuing Hand: Pakistan Acknowledges China’s Ongoing Support
In a display of gratitude and admiration, Prime Minister Shehbaz Sharif expressed his utmost appreciation for China’s unwavering support during Pakistan’s economic struggles. As the country found itself in a precarious situation with delayed agreements from the International Monetary Fund (IMF), China once again came to the rescue. This announcement was made during a momentous ceremony held in Islamabad, where Pakistan and China signed a memorandum of understanding (MoU) for the Chashma-5 (C-5) nuclear power project, which will generate 1,200 MW of power.
Pakistan, facing a severe shortage of foreign currency reserves, had anticipated the release of $1.1 billion from the IMF in November. However, the IMF imposed certain conditions before proceeding with the disbursement, further exacerbating Pakistan’s financial strain. In light of these circumstances, Pakistan sought China’s support to alleviate its payment pressures, as concerns of a potential default loomed.
To address its financial obligations, Pakistan is set to repay a $300 million loan to China on Friday, while another $1 billion loan is slated to be rolled over by June 30. Governor Jameel Ahmad of the State Bank of Pakistan confirmed these repayment plans. Additionally, Pakistan recently repaid a separate $1 billion loan to China, which was refinanced just last week.
In acknowledging China’s continuous assistance, Prime Minister Shehbaz remarked, “When Pakistan faces economic challenges and remains engaged with the IMF to meet all the required conditions for the ninth review, China once again comes to our aid.”
China’s support arrives at a crucial time, as the likelihood of Pakistan restarting its loan program with the IMF seems uncertain. The current loan program is set to expire at the end of June, and Pakistan is committed to fulfilling its debt obligations, which amount to approximately $23 billion in external debt payments for the upcoming fiscal year starting in July.
China has been providing annual loans to Pakistan for many years, and this year is no exception. In March, Chinese banks extended $2 billion, with an additional $2.3 billion debt expected to be rolled over in June, according to the central bank.
Published in PakWeb, June 20th, 2023.
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