News Brief
Amid Delayed IMF Bailout, China Extends Lifeline To Cash-Strapped Pakistan With $1 Billion Loan
Pakistan Prime Minister Shehbaz Sharif. (Representative Image)
Cash-strapped Pakistan has received $1 billion from China, according to a report by ARY News citing the State Bank of Pakistan.
This comes as a major relief to the cash-strapped nation, which is waiting for the International Monetary Fund to release a loan from the bailout programme.
The Pakistan central bank reportedly confirmed the receipt of the payment in a brief message to journalists on Friday night.
The message stated: "This is to inform you that USD 1 billion has been received from China," report ARY News.
Pakistan's Finance Minister Ishaq Dar, while commenting on the country's diminishing foreign reserves, said that $1.30 billion recently paid to settle a Chinese loan will be refinanced by China today or Monday.
Additionally, talks for a $2 billion dollar swap are also underway with Beijing, he added, according to ARY News.
Pakistan's economy is currently in turmoil due to financial woes and the delay in an agreement with the International Monetary Fund (IMF).
The IMF funding is crucial for Pakistan to avoid the risk of default. The country is yet to secure external financing, and the political instability is not helping the situation.
The IMF had earlier expressed dissatisfaction with Pakistan's recently presented budget.
Pakistan is facing a critical situation as it has barely enough currency reserves to cover one month's imports.
In November, it was hoping to have $1.1 billion of funds released. However, the IMF has set certain conditions that need to be met before it can make any further disbursements.
Despite holding several sessions, Pakistan Finance Minister Dar has failed to convince the top IMF officials to complete the ninth review.
This review is essential for securing a staff-level agreement that will enable the release of the $1.1 billion tranche.
Time is running out for Pakistan as it has only two weeks left to reach a deal with the IMF. Failure to do so would have serious consequences for the Pakistani economy.
According to a Dawn report, the bailout package will expire on 30 June. Pakistan is dealing with record inflation, fiscal imbalances, and low reserves while seeking to reach an agreement with the global lender.
The country's IMF programme expires this month, and it has over $2.5 billion in funding yet to be released.
The release of $1.1 billion from a $6.5 billion IMF package has been delayed since November.
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