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KARACHI: The much-awaited Chinese inflows amounted $2.3 billion were received on Friday to boost the sliding foreign exchange reserves of the country.

Pakistan and China, on June 23, signed a commercial loan deal of RMB 15 billion equal to $2.3 billion. The agreed amount arrived into the State Bank of Pakistan (SBP) account on Friday.

“SBP has received the Chinese consortium loan of RMB 15 billion today (Friday)”, SBP confirmed on twitter.

Minister for Finance Miftah Ismail also announced on twitter that a Chinese consortium loan of RMB 15 billion (roughly $2.3 billion) has been credited into SBP account, increasing our foreign exchange reserves.

Sources said that with the arrival of these inflows, the total liquid foreign exchange reserves held by the country are likely to cross the $16 billion mark after accumulating the external debt payments. The country’s total liquid foreign exchange reserves stood at $ 14.21 billion as of Jun 17, 2022.

Critical level: SBP-held foreign exchange reserves plummet to $8.24bn

Pakistan’s foreign exchange reserves have declined for the past few months due to lower foreign inflows and higher external debt. Cumulatively, during the last three weeks, the country’s foreign exchange reserves dropped by $1.56 billion to $15.771 billion as of May 27, 2022 as against $14.210 billion as of June 17, 2022.

In order to avoid default and maintain the country’s foreign exchange reserves at a sustainable level, the federal government is making efforts to get foreign inflows from different resources. On the request of Pakistan, Saudi Arabia last month redeposit some $3 billion with Pakistan.

As the same, Pakistan locked a deal with Chinese Development (CDB) for a loan facility of RMB 15 billion which is equal to $2.3 billion.

Pakistan is also negotiating with the IMF for the release of the next tranche of one billion dollar of Extended Fund Facility (EFF). The IMF is also likely to approve and release the EFF loan tranche very soon as the country has fulfilled all requirements and conditions of the IMF.

Copyright Business Recorder, 2022

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