Pakistan received $2.1 billion from China on Monday.
“State Bank of Pakistan has received RMB 15 billion today [Monday] which is equivalent to $2.2 billion as proceeds of the loan obtained by the government of Pakistan from China,” said State Bank of Pakistan in a statement.
The finance ministry spokesperson, Dr Khaqan Najeeb Khan, confirmed the deposit and said it will help contain the balance of payment position and boost the country’s foreign exchange reserves.
This is a part of the government’s successful multi-pronged strategy to ensure stability in its Balance of Payments (BOP), including curtailing current account deficit, improving remittances and ensuring adequate foreign exchange financing. Foreign exchange reserves increased to a comfortable level, the spokesperson said.
The latest commercial lending by China has pushed the gross official foreign exchange reserves to double-digits after a year.
On Thursday, the State Bank said that Pakistan’s total foreign exchange reserves increased to $15.70 billion on March 15. These include $8.83 billion reserves held by the State Bank and $6.87 billion reserves available with the commercial banks.0
“The financial support package for Pakistan is currently being worked out … it will be more than what extended by Saudi Arabia in terms of financial grant,” Deputy Head of Mission at Chinese Embassy Zhao Lijian told reporters in November last year.
The government was able to secure back to back aid packages from Saudi Arabia and the UAE during Prime Minister Imran Khan’s visits to these countries last year.
The Saudi government has dispatched the $3 billion it had pledged in support of our foreign exchange reserves. The UAE, on the other hand, has sent $2 billion and will send another $1 billion soon.
As Pakistan started receiving these loans, the dollar became stable. However, the current level of reserves, $8.8 billion, is still below the sustainable level. That is it is not enough to cover three months of import payments.