A Chinese bank has assured to provide another refinanced $500 million loan in the coming days, bringing the total of commercial loans to $1.7 billion out of the total committed amount of $2 billion.
“Another $500 million commercial loan is coming from a Chinese bank,” a top Finance Division official said on Wednesday, adding that it would be completed soon, reported a national daily.
Before moving forward with a staff-level agreement with the International Monetary Fund (IMF), Pakistan is trying to get 100 percent confirmation from donor countries and multilateral creditors.
Chinese banks have already refinanced $1.2 billion in commercial loans in the last couple of weeks, and Beijing may approve a further $500 million in loan re-financing in the coming days. Pertinently, Pakistan has also requested a rollover on a $2 billion Chinese SAFE deposit within the current month. All of this, including commercial loan refinancing and SAFE deposit rollovers, is required before the IMF and Pakistani sides can sign a staff-level agreement.
Pakistani authorities are now anxiously awaiting confirmation from the Kingdom of Saudi Arabia, the United Arab Emirates, and Qatar, as well as the World Bank and the AIIB, to meet their external financing needs for the remainder of the current financial year.
The guarantees for securing external financing are critical for the IMF program’s sustainability, as it is difficult for the State Bank of Pakistan to increase its foreign exchange reserves to $8-10 billion by the end of June 2023, despite projections of $16 billion in August 2022.