Finance Minister Ishaq Dar said on Wednesday that the board of directors of the China Development Bank had approved a $700 million loan to Pakistan.
Earlier this month, the country’s foreign exchange reserves fell below his $3 billion cautionary level for the first time in nine years, and import capacity fell to his little over two weeks.
Pakistan is seeking additional loan guarantees from Saudi Arabia and China as the government seeks to revive the International Monetary Fund program.
When Ishaq Dar took over as finance minister in September, his first preference was to seek financial support from friendly countries to circumvent his IMF’s harsh terms.
In November, the minister claimed $5.7 billion in new loans had secured $13 billion in bailouts from China and Saudi Arabia. Dar was confident the money would come before the IMF program was revived.
But as time went on, it became clear that Islamabad’s old ally refused to spend more money unless the country agreed to the terms of the fund first, at which point Pakistan agreed to her I had to ask an IMF mission to negotiate an agreement.
The country has gone to great lengths to persuade the IMF and now hopes its friends will come to its aid. Dar announced on his Twitter that the CDB has decided to help Pakistan. “The procedure has been completed,” the Finance Minister announced, adding that $700 million was expected to arrive at the National Bank of Pakistan later this week.
He claimed the loan would “support” Pakistan’s foreign exchange reserves.Meanwhile, Islamabad agreed to implement an economic and financial policy memorandum containing policy proposals from the IMF.
A staff agreement between the fund and the government is expected next week, sources said.
