New Delhi: Pakistan‘s financial woes are far from over despite support from Saudi Arabia and the UAE, forcing Islamabad to turn yet again to its all-weather ally China for a loan of $2.5 billion (nearly Rs 18,000 crore).
China has agreed to provide the money to help Pakistan boost its official foreign exchange reserves, which are not sufficient to provide cover for even two months of imports despite it recently receiving $4 billion of loans from Saudi Arabia and the UAE, ET has learnt.
China has emerged as Pakistan’s largest saviour in times of economic crisis in the past five years. With the latest tranche, China’s support to Pakistan in this fiscal year alone would surge to $4.5 billion. Last July, China had lent $2 billion to the State Bank of Pakistan, which is that country’s central bank. In the last fiscal year (2017-18), Pakistan had obtained $2.2 billion from three Chinese commercial banks — China Development Bank, ICBC China and Bank of China — apart from getting $1.8 billion from Beijing on a bilateral basis.
The Chinese money is coming as part of the government’s strategy to have support till the time its macroeconomic situation stabilises, people tracking the financing deals told ET.
After coming into power in August last year, Prime Minister Imran Khan has visited China, Saudi Arabia and the UAE to arrange emergency loans to avoid a default. Pakistan has secured $14.5 billion of commitments from these countries that have largely helped bridge its external financing gap in the ongoing fiscal year.