By Asif Shahzad
ISLAMABAD (Reuters) -China has rolled over a $600 million loan to Pakistan, helping shore up the South Asian country’s foreign exchange reserves on the back of a long-awaited deal with the International Monetary Fund, Prime Minister Shehbaz Sharif said on Tuesday.
China has already rolled over more than $5 billion in loans for Pakistan in the last three months, helping the country avert a default as negotiations to secure the IMF bailout dragged on.
“We have received another $600 million from our friend China,” said Sharif at an event in Islamabad.
As the IMF talks took months, Pakistan’s foreign exchange reserves shrunk to pay for barely a month of controlled imports, and an acute balance of payment crisis pushed the country to the brink of default.
Pakistan finally secured a $3 billion IMF bailout on June 30, which later disbursed an initial upfront instalment of about $1.2 billion.
A further $3 billion of financial support from Saudi Arabia and the UAE after the IMF pact has helped steady the Pakistani economy, according to Finance Minister Ishaq Dar.
Pakistan’s central bank said on Tuesday the current account recorded a surplus of $334 million in June, while the trade deficit fell 62% year-on-year in the same month.
For the financial year 2023 that ended in June, Pakistan’s trade deficit has fallen 43% to $27.6 billion.
Analysts say the huge drop in the deficit was due to import suppression policies Pakistan put in place late last year to try to overcome the balance of payment crisis.
The new IMF programme, however, requires Pakistan to lift import curbs which have artificially depressed the economy.
(Reporting by Asif Shahzad; writing by Sakshi Dayal; Editing by Shivam Patel and Christina Fincher)
