Finance Minister Ishaq Dar on Wednesday announced that the board of China Development Bank (CDB) approved a loan of $700 million for Pakistan.
Earlier this month, the country's foreign exchange reserves slipped to the alarming level of below $3 billion for the first time in nine years, reducing import capacity to slightly over two weeks.
As the government seeks to revive the International Monetary Fund (IMF) programme, Pakistan has sought to secure assurances from Saudi Arabia and China for more loans.
Read Economic crisis in Pakistan and the role of West
When Ishaq Dar took over as finance minister in September, his first preference was to avoid IMF’s tough conditions by seeking financial assistance from friendly countries.
In November, the minister claimed to have secured a $13 billion bailout from China and Saudi Arabia with $5.7 billion in fresh loans. Dar was confident that the cash would come before the IMF programme revival.
However, it became clear with time that Islamabad’s old allies refused to dole out more cash without the country first agreeing to the Fund's conditions. That was when Pakistan had to invite the IMF mission to negotiate the deal.
The country is now hoping that its friends would come to its rescue as it has done all the hard yards to convince the IMF.
Dar took to Twitter to announce that CDB has decided to lend Pakistan its support.
Formalities completed and Board of China Development Bank has approved the facility of US $ 700 million for Pakistan. This amount is expected to be received this week by State Bank of Pakistan which will shore up its forex reserves!
— Ishaq Dar (@MIshaqDar50) February 22, 2023
"Formalities completed," announced the financial czar, adding that $700 million was expected to reach the State Bank of Pakistan (SBP) by this week.
Read More Gas shortage exposes fragile Pakistan, Bangladesh to more pain
He maintained that the loan will "shore up" Pakistan's foreign exchange reserves.
On the other hand, Islamabad has agreed to implement the Memorandum of Economic and Financial Policies (MEFP), which contains policy suggestions by the IMF.
Sources have revealed that the staff-level agreement between the fund and the government is expected next week.
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