China approves $1.3 billion for cash-strapped Pakistan

Pakistan might have a ray of hope as the Industrial and Commercial Bank of China (ICBC) approved $1.3 billion facilities.

Taking to Twitter, Pakistan Finance Minister Ishaq Dar announced, “Formalities completed [and] Chinese Bank, ICBC approved rollover of USD 1.3 billion facilities which has been repaid by Pakistan to ICBC in recent months.”

He further said that the facility would be disbursed in three installments, the first one of USD 500 million has been received by the State Bank of Pakistan and added “It will increase forex reserves!”

Pakistan is currently facing growing economic challenges, with high inflation, sliding forex reserves, a widening current account deficit and a depreciating currency, reported Geo News.

Foreign exchange reserves were at USD 3.8 billion as of February 24, just enough for less than a month of imports. While the liquid foreign exchange reserves stand at around USD 9 billion which includes USD 5.5 billion in net reserves held by commercial banks.

Hours before his announcement, the finance minister revealed that China has renewed a facility under which Pakistan expected an additional inflow of USD 500 million in the “next few days”.

Highlighting the Pakistan Democratic Movement (PDM)-led government’s economic achievements, Dar said that the foreign exchange reserves held by the SBP climbed to USD 3.8 billion from USD 2.8 billion — recorded last month. He maintained that the government returned USD 6.5 billion of foreign debt during the current fiscal year, according to Geo News.

Meanwhile, on Wednesday, the Pakistan Bureau of Statistics said that the monthly inflation, measured by a basket of products called the Consumer Price Index (CPI), jumped to 31.6 per cent in February year-on-year.

Last month, prices rose at the fastest pace ever in the country’s history, according to available data, with food, beverage and transport costs driving inflation to a point where analysts fear “families will have to make choices and sacrifices,” reported the Dawn.

This was the highest annual rate since available data, i.e. July 1965, according to the research firm Arif Habib Ltd, and is also expected to rise even further in the coming months.

Inflation surpassed 30pc last month after having stayed above 20pc for eight months from June to January. Inflation was 12.2pc in February last year, reported Dawn.

Costs in four categories — transport, food and non-alcoholic beverages, alcoholic beverages and tobacco, and recreation and culture — jumped by around half.