Pakistan Seals $2 Billion Loan From China Amid IMF Delay
Pakistan expects to receive a 1.3 billion US dollar loan rollover from Industrial and Commercial Bank of China (ICBC), taking the total relief to 2 billion dollar for the nation that is seen at risk of a default.
ICBC has approved the rollover of existing debt and actual inflows will happen in three tranches with 500 million dollar in the next few days, Finance Minister Ishaq Dar said at a briefing in Islamabad Friday. The move follows a 700 million dollar loan by China Development Bank earlier this week.
The funds will provide a much needed relief for the nation that has about 7 billion dollar of repayments in the coming months. Pakistan's dollar bonds due next year slid to the lowest since November on Thursday as investors remained concerned on its ability to make good on its payment obligations amid a dollar crunch.
'China has made a great show of friendship,' Finance Minister said, adding that the nation is in a 'precarious' position, but it wono't default.
The nation's foreign-exchange reserves will rise to more than 10 billion dollar by June from less than one-month import cover of 3.8 billion dollar, said Ishaq Dar. Earlier this week, Moody's Investors Service downgraded the nation deeper into junk citing fragile external position.
Authorities in Pakistan are relying on a bailout loan from the International Monetary Fund (IMF) to stave off a default, which has remained elusive so far. To win the lenders support, the South Asian nation has increased taxes, raised energy prices and allowed its currency to depreciate. It will raise electricity prices in the next 24 hours for next financial year, that is one of the two pending prior actions, Finance Minister Ishaq Dar said without disclosing the second step.
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