Tag: China Development Bank

  • State Bank of Pakistan’s foreign exchange reserves rise to $4.3 billion after Chinese loan

    State Bank of Pakistan’s foreign exchange reserves rise to $4.3 billion after Chinese loan

    Pakistan’s foreign exchange reserves held by the State Bank of Pakistan (SBP) have exceeded $4 billion after the country received a $500 million loan from the Industrial and Commercial Bank of China (ICBC).

    In a weekly bulletin, the SBP reported a rise in foreign exchange reserves by $487 million, boosting the total to $4,301 million as of 3 March, providing an import cover of around a month. This was part of the ICBC’s $1.3 billion facility, which followed another loan of $700 million from the China Development Bank.

    These loans were essential as Pakistan has not received funds from any other country, except China, while the $350 billion economy struggles to revive its stalled International Monetary Fund (IMF) program.

    There are $7 billion of repayments due in the coming months, including a Chinese loan of $2 billion due in March. According to Geo, experts believe that the Pakistan rupee, which has fallen to a historic low of Rs282.30 against the dollar in the interbank market, can only recover to Rs265 if the situation improves.

    Meanwhile, the government has imposed restrictions on imports due to a shortage of dollars, which has resulted in the partial closure of textile and automobile manufacturers, raising fears of unemployment.

  • SBP-held forex reserves increase by $66 million as Pakistan seeks critical IMF loan tranche

    SBP-held forex reserves increase by $66 million as Pakistan seeks critical IMF loan tranche

    The State Bank of Pakistan (SBP) has reported a minor increase in its foreign exchange reserves, as the nation desperately seeks to unlock a critical tranche of funding from the International Monetary Fund (IMF).

    The central bank stated that its reserves had risen by $66 million to $3,258.5 million as of the week ended February 17, providing an import cover of around three weeks. The net foreign reserves held by commercial banks were reported to stand at $5,468.0 million, $2,209.5 million more than the SBP, taking the total liquid foreign reserves to $8,726.5 million.

    China development bank approves $700 million facility for Pakistan

    Finance Minister Ishaq Dar has announced that the forex reserves are expected to receive a significant boost in the coming week, as the Board of China Development Bank has approved a $700 million facility for Pakistan. The funds could be deposited into the SBP’s account this week.

    Pakistan takes austerity measures in a bid to resume IMF programme

    In a bid to resume the delayed IMF programme and avoid default, the Pakistani government has taken a series of steps in the past two months. These measures include adding new taxes, increasing energy prices, and loosening its control on the rupee.

    Parliament approved a supplementary finance bill that increases sales tax from 17 per cent to 25 per cent on imports ranging from cars and household appliances to chocolates and cosmetics. People will also have to pay more for business-class air travel, wedding halls, mobile phones, and sunglasses. A general sales tax was raised from 17 per cent to 18 per cent.

    Prime Minister Shehbaz Sharif also unveiled cost-cutting measures to save $764 million annually, stating that austerity, simplicity, and sacrifice are the need of the hour.

    Concerns over Pakistan’s debt and dollar crunch

    Fitch Ratings, a global credit ratings agency, has downgraded Pakistan’s $350 billion economy twice in four months, citing dwindling foreign reserves. Bloomberg data shows that Pakistan has coupon repayments of $542.5 million this year.

    In all, the country has $8 billion in dollar bonds debt due by 2051, with the next payment of $1 billion due in April of next year. Most of the nation’s external debt of about $100 billion is sourced from concessional multilateral and bilateral sources.

    Pakistan also faces a dollar crunch that tests its external stability, and supply disruptions caused by flooding, food shortages, and IMF preconditions for rescue may push inflation above 30 per cent for the first time on record, according to Bloomberg Economics.

  • China’s $700 million loan to boost Pakistan’s foreign exchange reserves

    China’s $700 million loan to boost Pakistan’s foreign exchange reserves

    Pakistan’s Finance Minister Ishaq Dar has announced that the Board of China Development Bank has approved a credit facility of $700 million for Pakistan, and all formalities have been completed.

    This announcement was made through a tweet, and the loan is expected to be received by the State Bank of Pakistan this week, which will help to boost the country’s forex reserves.

    According to Reuters, the credit facility, provided by the state-owned China Development Bank, will increase Pakistan’s forex reserves by about 20 per cent. This comes at a time when the country is in talks with the International Monetary Fund (IMF) to unlock funds from a $6.5 billion bailout. The loan is in addition to other facilities that China has already extended to Pakistan, and a finance ministry official has stated that the money could arrive as early as Thursday.

    China Development Bank did not respond to a faxed request for comment. Currently, China is Pakistan’s largest creditor, and its commercial banks hold approximately 30 per cent of the country’s external debt.