Pakistan has received a much needed boost to its foreign exchange reserves with the State Bank of Pakistan receiving $700 million from China Development Bank. The funds come at a time when the country’s bailout programme with the International Monetary Fund (IMF) remains stalled, and foreign exchange reserves held by the SBP had increased by only $66 million, leaving Pakistan’s policymakers scrambling to secure inflows. To revive the IMF programme, Pakistan has implemented several prior conditions, including passing a mini-budget that imposed nearly Rs170 billion of taxes. The receipt of the $700 million from China Development Bank will be a welcome relief for the country.
Federal Minister for Finance and Revenue Mohammad Ishaq Dar on Wednesday shared with Donald Blome, the US Ambassador to Pakistan, the government’s measures taken to meet its financial obligations, according to a statement issued by the Finance Division.
During the meeting, the finance minister shared economic policies and priorities of the government to address the challenging economic environment. Dar told Blome that the present government remains concerned about the well-being of the masses therefore a number of measures are being undertaken in this regard.
Dar informed the US envoy about the government’s plans related to revenues and expenditures for meeting its national as well as international financial obligations.
He shared various economic avenues in which both countries can further deepen their economic relations.
The two sides exchanged views on matters of common interest and enhance the existing bilateral relations between both countries.
Blome expressed confidence on the policies and programmes of the government for economic sustainability and socio-economic uplift of the masses. He extended his support to further promote bilateral economic, investment and trade relations between both countries, added the Finance Division statement.
Earlier during the day, Dar informed that the Board of the China Development Bank (CDB) has approved the disbursement of $700 million for Pakistan.
“Formalities completed and Board of China Development Bank has approved the facility of $700 million for Pakistan,” Dar announced in a post on social media platform.
“This amount is expected to be received this week by the State Bank of Pakistan which will shore up its forex reserves!” added Dar.
The development comes as foreign exchange reserves held by the SBP increased $276 million to $3.19 billion, data released last week showed. Total liquid foreign reserves held by the country stood at $8.7 billion. Net foreign reserves held by commercial banks stood at $5.51 billion.
Pakistan remains in talks with the International Monetary Fund (IMF) for the resumption of the stalled Extended Fund Facility (EFF) programme.
The Board of the China Development Bank (CDB) has approved the disbursement of $700 million for Pakistan, said Federal Minister for Finance and Revenue Ishaq Dar on Wednesday.
“Formalities completed and Board of China Development Bank has approved the facility of $700 million for Pakistan,” Dar announced in a post on Twitter.
“This amount is expected to be received this week by the State Bank of Pakistan (SBP), which will shore up its forex reserves!” added Dar.
The statement comes as Pakistan’s foreign exchange reserves have dwindled to a critically low level, and are not enough to cover the import of some 20 days.
Last week, the country’s total liquid foreign exchange reserves rose by $162 million during the last week. The total liquid foreign exchange reserves held by the country stood at $8.702 billion as of February 10, 2023 compared to $8.54 billion on Feb 3, 2023.
After declining $1.68 billion during the last three weeks, the SBP’s reserves increased by $ 276 million to $ 3.193 billion during the week under review.
Meanwhile, Pakistan remains in talks with the International Monetary Fund (IMF) for the resumption of the stalled Extended Fund Facility (EFF) programme.
Pakistan expects to conclude talks with the IMF over a staff-level agreement as soon as this week, Hamed Yaqoob Sheikh, the top official in the finance ministry, said in a crucial step towards unlocking funds to battle an economic crisis.
An IMF mission spent more than a week in Islamabad earlier this month to discuss a policy framework to allow the release of more than $1 billion in funding from a stalled $6.5 billion bailout package, originally approved in 2019.
However, the mission left without a conclusion.
The China Development Bank (CDB) is a development bank in China. As one of three policy banks in China, it is responsible for raising funds for large-scale infrastructure projects.
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