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Thursday, March 30, 2023

Pakistan recieves $500 million from ICBC

Finance Minister confirmed that the Industrial and Commercial Bank of China Ltd approved a rollover of a $1.3 billion loan for cash-strapped Pakistan, which will help shore up its depleting forex reserves.

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The Finance Minister, Ishaq Dar said that the fund will be disbursed in three installments and the first installment of $500 million has been received by the State Bank of Pakistan. This will help increase the foreign exchange reserves, he said in a tweet.

Moreover, the minister urged that the disbursement from ICBC is crucial for the country’s economy as it is facing a balance of payment crisis. Similarly, the foreign exchange reserves are dropping to a critically low level which is barely enough to cover three weeks of controlled imports.

Pakistan being a cash-strapped country, faced growing economic challenges such as high inflation, declining forex reserves, a widening current account deficit, and a depreciating currency. 

Read more: China approves $ 700 million loan for Pakistan

The minister said;

“Formalities completed [and] Chinese Bank, ICBC approved rollover of $1.3 billion facility which has been repaid by Pakistan to ICBC in recent months,” 

Furthermore, Pakistan has made payments of around $5.5 billion including $2 billion to the China Development Bank and ICBC and $3.5 billion have been given to banks in other countries, the minister confirmed. 

He also said Pakistan will need $5 billion in external financing to close its financing gap this fiscal year, which ends in June. 

Read more: Pakistan-IMF to reach an agreement next week

The minister further said that more external financing will be coming to Pakistan after the country signs a deal with the International Monetary Fund (IMF), which is likely to be done next week. The Fund and the country have been negotiating a deal for a $1.12 billion stalled program since early last month. 

The minister said; 

“We will, God willing, take this country out of this quagmire,”