Out of $2 billion, Pakistan is now set to return the $1 billion soon, leading Pak daily Express Tribune reported quoting sources in the finance ministry and the State Bank of Pakistan (SBP). The remaining $1 billion is due in January, Tribune reported.
However, this time around, China has not given the loan from its State Administration of Foreign Exchange, commonly known as SAFE deposits, nor has it extended a commercial loan, Tribune reported quoting the sources.
“Instead, both the countries have agreed to augment the size of a 2011 bilateral Currency-Swap Agreement (CSA) by an additional 10 billion Chinse Yuan or around $1.5 billion, the sources said. This has increased the size of the overall trade facility to 20 billion Chinese Yuan or $4.5 billion,” according to the Express Tribune.
The CSA is a Chinese trade finance facility that Pakistan has been using since 2011 to repay foreign debt and keep its gross foreign currency reserves at comfortable levels instead for trade related purposes.
The Express Tribune stated that it had sent questions to the SBP about the CSA and a delay in uploading data on currency circulation, M2, on its website. “The M2 data will be updated soon on the website” was the response of the central bank.
The bilateral Currency Swap Agreement was reached between the SBP and the Peoples Bank of China (PBOC) in December 2011 “in order to promote bilateral trade, finance direct investment and provide short-term liquidity support”, according to the central bank.
The original agreement had been renewed in December 2014 for a period of three years with an overall limit of 10 billion yuan or $1.5 billion. It was further extended in May 2018 for a period of three years, with the amount being increased to 20 billion Yuan or $3 billion, according to Express Tribune report.