Out of the $2 billion committed, a Chinese bank has promised to give another refinance credit worth $500 million in the next days, increasing the total amount of commercial loans to $1.7 billion.
According to a national daily, a top official with the Finance Division said on Wednesday, “Another $500 million commercial loan is coming from a Chinese bank,” adding that it would be finished soon.
Pakistan is attempting to obtain complete agreement from donor nations and multilateral creditors before moving further with a staff-level agreement with the International Monetary Fund (IMF).
Commercial loans from Chinese banks have already been refinanced for $1.2 billion in the past few weeks, and Beijing may soon sanction another $500 million in loan re-financing. Pakistan has also requested a rollover on a $2 billion Chinese SAFE deposit within the current month, which is pertinent. Before the IMF and Pakistani sides can sign a staff-level agreement, all of this is necessary, including the refinancing of commercial loans and rollovers of SAFE deposit accounts.
The World Bank and the AIIB, as well as Qatar, the United Arab Emirates, and the Kingdom of Saudi Arabia, have all confirmed that they will help Pakistani authorities satisfy its external financing needs for the rest of the current fiscal year.
It is difficult for the State Bank of Pakistan to boost its foreign exchange reserves to $8–10 billion by the end of June 2023, despite predictions of $16 billion in August 2022, which is why the guarantees for securing external funding are essential for the sustainability of the IMF programme.