Pakistan received the $ 1.3 billion USD trade loan from China and helped Islamabad achieve its currency reserve target of approximately $ 12 billion by the end of fiscal 2019-20.
The government had agreed with the International Monetary Fund (IMF) under the current $ 6 billion loan program to build the country's foreign exchange reserves to about $ 12 billion by June 30, 2020, experts said.
SBP received $ 1.3 billion in loans this week from the Pakistani government of Chinese banks. This brings the total amount of official inflow received since June 23, 2020 to approximately $ 3 billion, ”said the State Bank of Pakistan (SBP) in a tweet.
SBP has received $1.3 billion as GOP loan disbursements from Chinese Banks this week. This brings the total amount of official inflows received since 23rd June 2020 to around $3 billion.
— SBP (@StateBank_Pak) June 30, 2020
Earlier, SBP's foreign exchange reserves declined in the week of June 18, 2020 to a low of $ 9.96 billion in the week of June 18, 2020, mainly due to the massive repayment of foreign debt in recent weeks.
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Pakistan has significantly repaid foreign debt in the week ending May 26, 2020, resulting in a reserve of $ 1.71 billion. The payment surprised financial experts, describing it as the largest repayment of commercial loans in over a decade. They believed that Islamabad had repaid a short-term loan to a Chinese commercial bank.
The bank has now extended the loan and paid another $ 1.3 billion this week, she added.
Earlier last week, the World Bank, Asian Development Bank (ADB) and Asian Infrastructure Investment Bank (AIIB) paid new loans totaling $ 1.75 billion to Pakistan, according to the central bank. The government has provided huge foreign loans to repay the previously acquired loans.
Fitch Ratings recently said in a comment that Pakistan's debt-to-GDP ratio would be 89% and its fiscal deficit would rise to 9.5% of GDP in the past fiscal year (FY20) and 8.2% in the next fiscal year. However, the debt ratio would decline in FY21, she predicted.
Global corona freezing barriers have seriously affected the country's balance of payments as export earnings have fallen significantly and worker transfers have slowed since March. The government has repaid 5 trillion rupees in loans in recent years and plans to repay another 3 trillion rupees.
