China gives $600 mn to cash-strapped Pakistan

Islamabad: Pakistan’s finances got a further boost with the cash-strapped country getting an additional loan of $600 million from its long-standing ally, China, the Dawn reported. Prime Minister Shehbaz Sharif said that the loan aims to bolster the country’s foreign exchange reserves, which already got a boost due to a $3-billion bailout package from the International Monetary Fund (IMF).

This loan comes on top of the substantial financial support provided by China in the past three months. Beijing has rolled over $5 billion in loans to Pakistan during this period, helping the debt-ridden nation avoid a potential default as negotiations for the IMF bailout continued.

Pakistan secured a $3 billion bailout from the IMF on June 30, with an initial upfront instalment of approximately $1.2 billion already disbursed. Sharif mentioned that the rollover loan of $600 million has been provided by the Exim Bank of China, thus increasing the country’s foreign exchange reserves.

While acknowledging the increasing foreign exchange reserves, Sharif expressed the desire to generate income rather than relying solely on loans. Last week, Pakistan also received a deposit of $2 billion from the Kingdom of Saudi Arabia.

In positive news for Pakistan’s economy, the State Bank of Pakistan reported a surplus of $334 million in the current account for the month of June. This surplus indicates a positive balance between the country’s exports and imports.

The financial support from the IMF, Chinese loans, as well as the $2 billion from Saudi Arabia and $1 billion from the UAE following the IMF agreement, have collectively contributed to stabilizing Pakistan’s economy, as noted by Finance Minister Ishaq Dar.

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