China’s $2 bn aid to help Pak get IMF bailout

ISLAMABAD: Cash-strapped Pakistan has received a rollover of USD 2 billion in deposits for a period of one year from its all-weather ally China to help Islamabad get a much-required bailout from the IMF to stabilise its economy, a media report said on Friday.

The rollover, which basically is not a loan but a financial deposit to be kept at Pakistan’s central bank for a period of one year, is one of the requirements of the International Monetary Fund (IMF) in meeting its external financing needs in order to move towards inking the staff-level agreement. Minister for Finance Ishaq Dar confirmed the development.

“Yes,” Dar was quoted as saying in a brief response when asked about getting a rollover of USD 2 billion SAFE (State Administration of Foreign Exchange)

deposits from China.

Pakistan and the IMF have been negotiating the release of a USD 1.1 billion loan since February but so far without any success due to the tough conditions by the donor which Pakistan is slow to fulfil.

Pakistan is scrambling to increase its forex reserves which are estimated to be at USD 4.8 billion after China refinanced USD 500 million last week. Earlier, a Chinese bank provided USD 700 million to Pakistan.

Despite a slight improvement in the reserves, the situation is still grim as the country needs to pay USD 7 billion till June this year, making further borrowing necessary.

Efforts to secure a loan from the IMF have been unsuccessful so far, which is expected to open avenues for further borrowing from the international market or getting loans from friendly countries.