Finance Minister Ishaq Dar disclosed that Pakistan has repaid $1 billion to China, offsetting a due amount of $1.3 billion. The repayment was made on the preceding Monday, with the hope that it would facilitate the return of the remaining funds.
The country’s economy is facing the risk of default as it strives to meet the demands set by the International Monetary Fund (IMF) to secure the outstanding $2.5 billion from a previously agreed bailout package of $6.5 billion in 2019. Pakistan has received $1 billion in financial assistance from China, aiming to alleviate its critically low foreign reserves. The State Bank of Pakistan (SBP) confirmed the receipt of the funds, although specific details were not disclosed. The injection of funds will contribute to strengthening Pakistan’s reserves, which had recently dropped to approximately $3.9 billion.
Pakistan faces challenges in securing multilateral loans or bilateral assistance without the support of the IMF. While it is unlikely that the entire sum will be repaid before the program concludes on June 30, Pakistan seeks a symbolic gesture of support for its policies from the IMF in the form of a tranche of $1.1 billion. China continues to provide steadfast support to Pakistan, while Saudi Arabia and the UAE have shown selective support.
Finance Minister Dar has previously criticized the IMF, alleging geopolitical motivations behind its loan package. He claimed that global institutions desire Pakistan to default, similar to Sri Lanka, to initiate negotiations. In the absence of IMF support, Pakistan is actively exploring alternative avenues to sustain its economy. One option involves timely repayment of multilateral loans while engaging in discussions regarding the rollover of bilateral loans with individual countries.
Pakistan is hopeful that China will agree to rollover $4 billion of bilateral loans, as the country anticipates the rollover of approximately $9 billion in loans from various nations in the upcoming fiscal year starting on July 1. Additionally, Pakistan seeks to refinance a $300 million loan from the China Development Bank, which matures on June 30.
