Ishaq Dar, Pakistan’s Finance Minister, has confirmed that the board of the China Development Bank (CDB) has approved a loan of $700 million to Pakistan. As a result of the announcement, the country’s foreign exchange reserves have fallen to just under $3 billion, their lowest level in nine years, significantly reducing import capacity to just over two weeks.
As Pakistan attempts to revive its International Monetary Fund (IMF) program, it has sought financial support from friendly countries, including China and Saudi Arabia, and has secured assurances of additional loans.
Dar’s top priority since taking office as finance minister in September has been to obtain financial support from allies in order to evade the strict IMF requirements. He stated in November that China and Saudi Arabia had agreed to a $13 billion bailout, which included $5.7 billion in new loans. However, it quickly became evident that the nation’s allies would not offer additional financial support without Pakistan first accepting the IMF’s requirements.
Despite this setback, Dar remains optimistic and has been striving to persuade the IMF to enter into a deal with him. Recently, he announced on Twitter that the CDB had agreed to lend Pakistan $700 million, with the funds expected to reach the State Bank of Pakistan (SBP) this week. According to him, the loan will boost the country’s foreign exchange reserves.
Islamabad has agreed to implement the Memorandum of Economic and Financial Policies (MEFP), which includes the IMF’s policy recommendations, in exchange for this loan. A staff-level agreement between the fund and the government is predicted to be reached next week, according to sources.
Pakistan’s economy, which has been hampered by a depreciating currency, a balance of payments crisis, and political unrest, is given a much-needed boost by this loan from the CDB. Pakistan hopes to stabilize its economy and get back on the path of sustainable growth with the help of its allies and the IMF.