Dar confirms rollover of $2-billion China loan, says issue is ‘no longer pending’
Finance Minister Ishaq Dar clarified on Friday that the $2-billion loan from China has been successfully rolled over, putting an end to any speculation regarding its status. He stated that the matter is “no longer pending,” refuting earlier reports suggesting ongoing negotiations.
Finance Minister Ishaq Dar addressed concerns regarding the $2-billion deposit from China, emphasizing that it is no longer pending and confirming its successful rollover. He responded to queries raised by PPP Senator Raza Rabbani in Parliament, stating, “I want to confirm that the $2-billion deposit from China, which was due on 23 March, is no longer pending.” Additionally, Dar noted that the documentation for this loan for the fiscal year 2023-24 has been completed.
Despite these assurances, earlier reports from Reuters suggested that China was still in the process of considering Pakistan’s request for the loan rollover.
A top finance ministry official, speaking anonymously, mentioned that formal documentation was underway, and a formal announcement would be made. However, Dar dismissed these reports as “totally speculative.”
The rollover is of significant importance to Pakistan, given its current foreign exchange challenges, with reserves dwindling to just four weeks’ worth of imports. The country is engaged in talks with the International Monetary Fund (IMF) to secure bailout funds.
Dar clarified that Pakistan engages in two types of financial transactions with China, involving the central banks and commercial banks. The SAFE deposit, involving the central banks of China and Pakistan (State Bank of Pakistan), is described as a sovereign business. The second type involves transactions with commercial banks in China, such as Industrial and Commercial Bank of China (ICBC), Bank of China, and China Development Bank.
As Pakistan grapples with the risk of defaulting on its obligations, China has provided support, with the central bank receiving a 0 million disbursement from ICBC earlier in the month.
This disbursement was part of a $1.3 billion rollover facility from the institution. In February, China Development Bank also refinanced a $700 million loan, bringing the total facility from Chinese institutions to $2 billion.
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