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Cash-strapped Pakistan has sought financial assistance of $2 billion from its close ally China for a year, The Express Tribune newspaper reported.
According to the report, in a letter to Chinese Premier Li Qiang, caretaker Prime Minister Anwaarul Haq Kakar has requested his counterpart to roll over the debt as soon as the deposit time for the loan from China is completed on March 23.
Kakar expressed gratitude to China for its financial assistance to Pakistan as the country has secured a safe deposit of a total of $4 billion in loans from China. This has reduced Pakistan's mounting pressure on external debt payments and stabilized its foreign exchange reserves.
Earlier in January, the UAE rolled over Pakistan’s maturing loan of $2 billion, while Saudi Arabia deposited $5 billion with the State Bank of Pakistan.
As per details, after the loan rollover by the UAE, the interim government requested the International Monetary Fund (IMF) to dispatch a new mission this month for talks for the last loan tranche of $1.2 billion.
The IMF’s next mission is critical for not only securing the last loan tranche but also for beginning negotiations for a new long-term programme.
Former finance minister Ishaq Dar, while speaking to a private TV news channel recently, had said in case his party – the Pakistan Muslim League-Nawaz (PML-N) – won the elections and formed the government, the decision about the new IMF programme would be made at the earliest.
Dar, the four-time finance minister of the country, said his party decided not to enter the IMF programme, it would immediately start implementing the belt-tightening measures.
The IMF has made new adjustments in its fresh staff-level report about the available financing to Pakistan.
The IMF has increased the projection of budget support loans to USD 3 billion but cut the project financing to USD 3.7 billion for this fiscal year.
The overall external financing requirements have been reduced to a little under $25 billion with minor downward adjustments in the current account deficit projections, the report said.
The report suggested the global lender had made a minor adjustment of $575 million in its current account deficit projection in comparison with July’s estimates.
The IMF has now projected the deficit at $5.7 billion or 1.6 percent of the GDP – an estimate that appeared on the higher end.
Pakistan is in economic ruin and awaiting a monumental financial default without long overdue structural reforms sought by global creditors such as the IMF and the World Bank.
The primary reason behind Pakistan’s economic woes is its staggering debt levels, which, as of 2023, amount to nearly $125 billion owed to external creditors, with approximately one-third to China.
With agency inputs.
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