2 Chinese commercial banks may refinance loans of $500 million and $700 million that Pakistan repaid a few months ago — file photo
Islamabad: Pakistan has to immediately repay a loan of 500 million dollars to a Chinese commercial bank in the backdrop of uncertainty still lingering over the dates of the ninth review delegation of the International Monetary Fund (IMF).
The second major loan repayment payment will be made within a week, and if no major payments are received during this period, the country’s foreign exchange reserves will fall below $4 billion. Pakistan is due to make the big payment in the next 72 hours with the hope that other Chinese financial institutions will start disbursing new loans after the Lunar New Year holidays.
Sources in the Ministry of Finance said that the government will repay the loan of $500 million to the Chinese Commercial Bank, another loan of $300 million given by it is to be repaid in the fourth week of February. However, the Ministry of Economic Affairs is showing the full payment of $800 million to the Chinese Commercial Bank in the next month, indicating some discrepancies in the data from the two ministries.
This will be the second payment Pakistan will make to a Chinese financial institution within a week. Earlier over the weekend, a guaranteed Chinese loan of about $328 million, which Pakistan had taken to set up power plants, was repaid. Pakistan requested China to roll over this guaranteed loan but China did not immediately agree.
Sources say that if there is no immediate injection of foreign exchange from any side, the country’s foreign exchange reserves may fall further to close to $3.5 billion by the end of this week.
It should be noted that recently Pakistan had invited the IMF to send its mission to Islamabad with the aim of restoring the derailed bailout program.
However, neither side has yet officially said whether the IMF mission will come this week, as requested by Pakistan.
Diplomatic and central bank sources have said that two Chinese commercial banks may refinance loans of $500 million and $700 million that Pakistan repaid a few months ago. The processing of the $500 million loan has entered the next stages while the draft of the $700 million loan agreement has also been received.