Pakistani Finance Minister Miftah Ismail said on Thursday afternoon that China had agreed to refinance Pakistan with US $ 2.3 billion worth of funds amid the dwindling foreign exchange reserves of the country.
“Good News: The terms and conditions for refinancing of RMB 15 billion deposit by Chinese banks (about US$2.3 billion) have been agreed. Inflow is expected shortly after some routine approvals from both sides. This will help shore up our foreign exchange reserves,”Ismail tweeted.
This development comes as the restoration of the country’s delayed International Monetary Fund (IMF) programme depends on the government’s capacity to make a fiscal adjustment of about 2.5 percent of the Gross Domestic Product (GDP).
The fiscal adjustments can be made by increasing the revenues and reducing the expenditure in the next budget.
In order to demonstrate its commitment to implement the ‘reform agenda,’ the Pakistani government must end the subsidy of petrol and diesel prices, raise electricity tariffs by Pakistani Rs 8 per unit via an increase in base tariff and fuel price adjustments and increase gas tariffs by 20 percent on average.
Miftah Ismail said that the staff-level agreement with IMF was expected to take place in mid-June of this year. It also indicates that the agreement is expected to be made only after the announcement of the next budget, in line with the IMF programme’s objectives.
