Miftah announces $2.3bn Chinese loan deal, capital inflows expected ‘within days’

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On Wednesday, Finance Minister Miftah Ismail announced that a consortium of Chinese and Pakistani banks had signed a $2.3 billion (15 billion renminbi) loan facility agreement, with an expected cash inflow. in a few days”.

The Minister announced on Twitter that the Pakistani side signed the agreement yesterday. Ismail said, “We thank the Chinese government for supporting this transaction.”

Foreign Minister Bilawal Bhutto-Zardari also thanked Chinese leaders.

“The people of Pakistan appreciate the unwavering help of our allies in all weathers,” he remarked.

The finance minister announced earlier this month that the terms and circumstances for the refinancing of the deposit by Chinese banks had been agreed.

He said the loan would “increase our foreign exchange reserves”.

Ismail told a news conference on June 2 that China revoked the loan on March 25 and imposed strict restrictions under which Pakistan could not use the funds.

He further said that after a visit by Foreign Minister Bilawal Bhutto-Zardari and subsequent discussions between Prime Minister Shehbaz Sharif and Prime Minister Li Keqiang, the Chinese side not only agreed to postpone the amount, but the had also done at a lower interest rate of 1.5pc plus the Shanghai Interbank Offered Rate (Shibor) as opposed to the previous 2.5pc plus the Shibor.

Ismail did not comment on the deal with the consortium in today’s statement.

The development follows news that Pakistan had agreed with the International Monetary Fund (IMF).

According to central bank data, it will also increase Pakistan’s cash reserves, which currently stand at $8.99 billion.

The minister has previously said that an agreement with the IMF would pave the way for obtaining loans from other international organisations. In May, he said that even China had made all financing conditional on the renewal of the IMF program.

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