Pakistan Seeks $600 Million Loan From China

Pakistan wants $600 million in new loans from two Chinese banks and is also optimistic about the successful conclusion of ongoing talks with the International Monetary Fund (IMF) to enhance its credit rating. The federal government is working out a $600 million loan with the Industrial and Commercial Bank of China (ICBC) and the Bank of China. Each bank was approached for a $300 million loan. Negotiations are nearing completion, and loans are anticipated to be delivered by next month, reported Express Tribune. China and Pakistan were working closely together to finish the remaining technical formalities for the $600 million loan. Notably, the interest rates on the new commercial facilities would be higher than past arrangements amid a high global interest rate environment. Following the staff-level agreement with the IMF, Pakistan also intends to re-engage non-Chinese banks, who have recently avoided entertaining the South Asian nation due to bad credit ratings and rising external sector risks. It bears mentioning that China has provided $21.2 billion in loans to Pakistan since 2000, accounting for 30 percent of overall funding, according to AidData. These loans were made to avoid default and to boost the country’s stagnating forex reserves.