Pakistan has been assured of the much-awaited financial support from China, according to senior officials of the incoming government, as the government looks to avoid seeking funds from the IMF.
As per an article published by the Financial Times, senior members of Pakistan Tekreek-e-Insaf party have claimed that they have been assured of the granting of more loans from Beijing over the coming months to help them stock up the country’s dwindling foreign exchange reserves.
According to a senior party leader, “The Chinese have signalled their intent to keep helping Pakistan avoid a crisis, a default.” But he added that Chinese officials have urged their Pakistani counterparts “to take steps to reduce the large deficit”.
According to the State Bank of Pakistan, foreign reserves held with the country’s central bank stood at $10.369 billion until August 3rd 2018. Such a level of foreign reserves are only enough to cover merely two months of exports.
The loans needed from China, are meant to support these reserves, as they’ve done time and again. In the last financial year, China has lent over $5 billion to Pakistan.
The assurances for further loans come as both the nations seek to avoid disclosing details of the $60 billion worth projects associated with the China Pakistan Economic Corridor.
Despite these assurances, the exact amount that China would be willing to lend remains a mystery, which raises the question as to whether these loans would be enough to avoid an IMF bailout entirely.
