A Chinese bank has promised Pakistan that it will give another refinancing loan of $500 million soon, increasing the total amount of commercial loans to $1.7 billion out of the total agreed amount of $2 billion.
Prior to negotiating a staff-level agreement with the International Monetary Fund (IMF), the Pakistani government is rushing from pillar to post to obtain 100% confirmation from favorable donor countries and multilateral creditors (IMF).
Pakistan was required to obtain the refinancing of commercial loans as well as a rollover on deposits from China throughout the program duration, which is set to end in June 2023, as per an unwritten agreement with the IMF.
A senior member of the Finance Division was quoted in a media report as saying that “another $500 million commercial loan is coming from a Chinese bank” and promised that it will be completed shortly.
It is important to note that Pakistan had also asked for permission to offer a rollover on the $2 billion Chinese SAFE deposit for the current month.
The refinancing of business loans and rollovers on SAFE deposits are all prerequisites before the IMF and Pakistani side can move towards finalizing a staff-level agreement. The IMF received assurances from Pakistan’s budget makers that they would create gender-based budgets for the next fiscal year.