Ishaq Dar, Pakistan’s finance minister, revealed that the China Development Bank had given Pakistan $700 million in funding. The nation needs this deposit badly because it has been dealing with a large amount of external debt and only has sufficient reserves of foreign currencies to handle less than three weeks’ worth of imports. The investment is a “lifeline” for Pakistan, according to the finance minister, as it will give the country’s faltering economy much-needed support.
Relevance of China’s Investment in Pakistan:
The loan will increase the nation’s dwindling foreign currency reserves and this week’s expected delivery of the funds to the Pakistani State Bank.
The alliance government has been attempting to increase the country’s reserves of foreign currency, which presently rank at $3.25 billion since about February 17.
It has proven challenging for the government to accomplish this objective due to the delay in the restart of the $6.5 billion international monetary fund (IMF) program.
Loan Restructuring by Pakistan:
Additionally, Pakistan is attempting to refinance two additional commercial debts totaling $500 million as well as $800 million. By the end of February as well as the beginning of March 2023, Pakistan hopes to refinance Chinese debts totaling up to $2 billion.
The pressure on Pakistan’s economy, which has been suffering as a result of the pandemic and foreign debt, is anticipated to lessen somewhat as a result of this deposit from China.
Gross Debt of Pakistan:
For the current fiscal year 2022–2023, Pakistan’s foreign debt servicing obligation is $23 billion, of that which $6 billion has been repaid and $4 billion rolled over, leaving $13 billion that still needs to be funded. The country has an outstanding debt of $75 billion, which must be paid off between fiscal years 2024 and 2026.
