Chinese bank approves $700m financing for Pakistan

• Finance minister says facility to shore up Pakistan's forex reserves.
• Pakistan needs to secure additional external financing avenues to unlock IMF tranche.
• Pakistan is stuck in a dire balance of payment crisis and needs to secure the tranche.

In a boost to the forex reserves, Finance Minister Ishaq Dar announced on Wednesday that the Board of China Development Bank has approved a $700 million facility for Pakistan. 

"This amount is expected to be received this week by State Bank of Pakistan which will shore up its forex reserves!" tweeted finance minister Dar, adding that the formalities have been completed. 

A finance ministry official told Reuters the loan was in addition to other facilities that China has already extended to Pakistan.

On the issue of re-financing of commercial loans from Chinese banks, one top official of the government informed The News that they were hopeful that all Chinese matured loans would be re-financed soon. 

However, according to official sources, two more commercial loans were expected to be re-financing including $500 million and $800 million. 

So in totality, Pakistan is eyeing to get re-financing of Chinese loans up to $2 billion by the end of February or the first week of March 2023. 

Pakistan is stuck in a dire balance of payment crisis and needs to secure the $1 billion tranche under the $6.5 billion Extended Fund Facility from the International Monetary Fund (IMF).

One of the demands of the global lender was that Pakistan needs to secure additional external financing avenues. 

Apart from this, the IMF is also demanding slapping additional power surcharges and hiking the policy rate from Pakistan.