Pakistan has signed a deal to secure a $2.3 billion loan from China as progress continues on the revival of an International Monetary Fund (IMF) bailout programme.
The Chinese consortium of banks signed the 15 billion yuan loan facility agreement after it was signed by Pakistan, Finance Minister Miftah Ismail said.
“Inflow is expected within a couple of days. We thank the Chinese government for facilitating this transaction,” Ismail wrote on Twitter.
Meanwhile, Islamabad is expecting the IMF to increase the size and duration of its 39-month, $6 billion facility.
Economy on Brink of Crisis
The statements came as Pakistan’s economy teeters on the brink of a financial crisis, with foreign exchange reserves drying up fast and the rupee at record lows against the US dollar as uncertainty surrounded the IMF programme.
Supporters of ousted prime minister Imran Khan have staged regular protests over inflation in recent weeks.
“Discussions between the IMF staff and the authorities on policies to strengthen macroeconomic stability in the coming year continue, Esther Pérez Ruiz, the IMF’s resident representative in Islamabad, said.
“Important progress has been made over the [fiscal 2023] budget,” she added.
Pakistan unveiled a 9.5 trillion rupee ($47 billion) budget for 2022-23 this month aimed at tight fiscal consolidation in a bid to convince the IMF to restart much-needed bailout payments.
However, the lender later said additional measures were needed to bring Pakistan’s budget in line with the key objectives of the IMF programme.
The two sides held talks on Tuesday night and agreed on the budget and fiscal measures but still need to agree on a set of monetary targets, Ismail said.
He did not expect any “hiccups” in the remaining talks and expected an initial memorandum on macroeconomic and financial targets and then an official agreement.
- Reuters, with additional editing by George Russell