Pakistan receives $1bn from China: SBP

The State Bank of Pakistan (SBP) said that it has received $1 billion from China, an inflow that occurs after Islamabad repaid the amount earlier.

“This is to inform you that $1 billion has been received from China,” said the SBP in a brief message to journalists on Friday night.

The inflow is the same loan paid back to China a few days earlier, and currently not reflected in Pakistan’s foreign exchange reserves’ position.

Pakistan currently faces faltering foreign currency reserves that stood at nearly $4.02 billion as of June 9, as per the data released on Thursday.

Pakistan faced a total of $3.7 billion of debt payments, Fitch Ratings said in May, putting pressure on its foreign exchange reserves that have left policymakers scrambling to arrange dollar inflows at a time when its bailout programme with the International Monetary Fund (IMF) remains stalled at the ninth review.

Earlier, Pakistan’s reserves got a boost after the country received $300 million from the Industrial and Commercial Bank of China Ltd (ICBC), the last of three disbursements that cumulatively added to $1.3 billion.

Pakistan also received a loan of $700 million from the China Development Bank.

Separately, China also rolled over a $2-billion loan, lending further support to Pakistan’s faltering dollar reserves.

The critical level of foreign exchange reserves underscores the need for revival of the stalled programme with the IMF.

On Thursday, IMF expressed dissatisfaction with the budget proposals announced by Finance Minister Ishaq Dar for fiscal year 2023-24, calling them a missed opportunity to broaden the tax base while criticising the new amnesty scheme that “creates a damaging precedent”.

“The draft FY24 Budget misses an opportunity to broaden the tax base in a more progressive way,” Esther Perez Ruiz, the IMF Resident Representative for Pakistan, told Business Recorder.

Perez Ruiz said the IMF remains engaged to discuss policies to maintain stability, and “it stands ready to work with the government in refining this budget ahead of its passage”.

In its response, the Ministry of Finance said on Friday that the budget for fiscal year 2023-24 was “never a part of the ninth review”.

However, it added that “we are not ‘doctrinaire’ about any element of the Budget FY24 and are keenly engaged with the IMF to reach an amicable solution”.

The ninth review of Pakistan’s IMF programme has been pending since November last year.