ISLAMBAD (Reuters) – Pakistan’s Finance Minister Ishak Dar said on Thursday China had rolled over $2 billion in loans that matured last week, providing relief to South Asian countries’ deep balance of payments crises. .
Locking in a rollover would be critical for Pakistan, whose reserves have dwindled to just four weeks’ worth of imports and stalled negotiations over a $1.1 billion bailout tranche from the International Monetary Fund (IMF). was important to
“I’m happy to confirm that this has been rolled over to March 23,” Dar said in parliament, referring to the maturity date.
Neither the Beijing government nor the central bank of China responded to requests for comment on the rollover.
Dar’s comment was the first official rollover announcement after the loan matured. Dar did not disclose a new maturity date or other terms of the deal.
A senior Treasury official told Reuters on Wednesday that formal confirmation of the refinancing would come after the process was completed.
One of the IMF’s conditions for issuing the next tranche is a guarantee of external funds to fund Pakistan’s balance of payments.
Longtime ally Beijing refinanced Pakistan’s central bank for $1.8 billion last month, providing the only support Islamabad has received so far.
In its monthly economic update and outlook, the government’s finance department noted that Pakistan is currently facing a shortage of external liquidity.
Islamabad has been in talks with the IMF since early February to release $1.1 billion from a $6.5 billion bailout package agreed in 2019. To free up money, the government cut subsidies, removed artificial exchange rate caps, and increased taxes. and rising fuel prices.
“The government is trying to contain the current account deficit through demand management policies, but this is unlikely to put further pressure on dwindling reserves,” the report read.
Inflation is already over 30% and is expected to remain at its highest level in nearly 50 years.
The report cites market frictions caused by the relative demand-supply gap of essential commodities, depreciation of the exchange rate and the recent upward adjustment in fuel prices as reasons for rising inflation expectations.
Reported by Asif Shahzad, Islamabad and Ariba Shahid, Karachi, Pakistan.Edited by Jason Neely, Frank Jack Daniels and Mark Heinrich
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