Earlier this month, the country’s foreign exchange reserves fell critically low at $3 billion for the first time in nine years, reducing the controlled import capacity to two weeks only.
The government seeks to revive the International Monetary Fund’s (IMF) $7 billion program by implementing IMF’s tough conditions. The finance minister said that his first preference was to avoid IMF’s conditions by seeking financial assistance from friendly countries like China and Saudi Arabia.
Read more: Why Pakistan needs to think twice before accepting IMF conditions
Earlier in November, the minister claimed to have secured a $13 billion bailout from China and $5.7 billion from Saudi Arabia. He was confident that the financial assistance would come before the IMF economic bailout. However, the loan disbursements couldn’t continue and Pakistan had to invite the IMF mission to negotiate the stalled program deal.
Moreover, the minister is still optimistic that friendly countries would come to rescue the country as IMF has set even tougher conditions for the economic bailout. However, the government is currently holding virtual talks with the Fund that would not only unlock $1.2 billion disbursement but attract inflows from friendly countries and other multilateral institutions.
CDB loan to Pakistan
The minister announced on his official Twitter account that China Development Bank (CDB) has decided to support Pakistan in its tough times. The Bank has announced a $ 700 million loan to Pakistan amidst economic uncertainty and political instability.
Read more: Government presents “mini- budget ” 2023 in National Assembly
Formalities completed and Board of China Development Bank has approved the facility of US $ 700 million for Pakistan. This amount is expected to be received this week by State Bank of Pakistan which will shore up its forex reserves!
— Ishaq Dar (@MIshaqDar50) February 22, 2023
He was of the view that the country’s foreign reserves would grow to a greater extent by the end of June this year. Additionally, China and Saudi Arabia would enhance their support which would help complete government-to-government (G2G) disinvestments. Similarly, the minister also claimed that the current account deficit would be $ 3 billion less than earlier projections.
On the other hand, IMF and Pakistan have moved closer to the revival of $7 billion Extended Fund Facility (EFF) as Pakistan agreed to the Memorandum of Economic and Financial Policies (MEFP). It is assumed that the staff-level agreement between the Fund and the government is expected next week.