Friday, December 1, 2023

Cash-strapped Pakistan receives funds worth USD 700 million from China Development Bank

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Pakistan Finance Minister Ishaq Dar announced on Friday that the State Bank of Pakistan (SBP) has received USD 700 million from the China Development Bank (CDB). This is a much-needed boost to the country’s forex reserves as the country suffers from an economic crisis, according to Pakistan-based The Express Tribune Newspaper.

Dar made the announcement on his Twitter account. He stated: “AlhamdoLilah! Funds USD 700 million received today by State Bank of Pakistan from China Development Bank”. Dar had previously stated in a tweet that the loan would “bolster” Pakistan’s foreign exchange reserves.

According to The Express Tribune, the country’s foreign exchange reserves fell below USD 3 billion earlier this month for the first time in nine years, reducing import capacity to slightly more than two weeks.
Pakistan has sought assurances from Saudi Arabia and China regarding additional loans as the government seeks to restart the International Monetary Fund (IMF) programme.

The current situation in Pakistan is the most difficult faced by the country in the last two decades, according to South Asia Press, adding that the country has been drained of its resources as a result of an economic crisis, political chaos, and an increase in the number of terror attacks in the country’s northwest.
Furthermore, the report claims that the country’s economic downturn has a direct impact on the general public.

According to South Asia Press, the floods in Pakistan dealt a severe blow to the cash-strapped country, which was already dealing with high debt. The country’s planning commission, agriculture, food, livestock, and fisheries sectors lost USD 3.7 billion in the floods, with long-term losses estimated to be around USD 9.24 billion.

According to the report, inflation in the country was 24.5 percent in December 2022, nearly double the 12.3 percent in the previous year, and the common people were the most affected by the high flour prices during the country’s worst-ever food crisis.

Kristalina Georgieva, managing director of the International Monetary Fund (IMF), said the funding agency has asked Pakistan to take steps to be able to function as a country and not get into a dangerous situation where debt restructuring is required, according to The News International, a Pakistani daily.

“My heart goes out to the people of Pakistan. They have been devastated by the floods that affected one-third of the population of the country,” Georgieva said in an interview with an international broadcaster.

“We are emphasising two things — number one, raising tax revenues, as those who are making good money in public or private sectors, need to contribute to the economy, and, number two, a fairer distribution of precious resources by taking subsidies away from people who don’t need them. It shouldn’t be that the wealthy benefit from subsidies. It should be the poor [who] benefit from them,” she said, as quoted by The News International newspaper.

“And there, we are very clear. We want the poor people of Pakistan to be protected,” she added.

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