Virendra Pandit
New Delhi: Amid apprehensions that the Afghan Taliban-supported Tehreeke-e-Taliban Pakistan (TTK) and the Baluch terrorists could target the China-Pakistan Economic Corridor (CPEC) infrastructure projects and Gwadar Port, Beijing on Saturday approved a USD 1.3 billion loan for cash-strapped Islamabad to wean it away from declaring a Sri Lanka-type default in the coming weeks.
Since 2015, China has made massive investments in the USD 62 billion CPEC which the Pakistan and Afghanistan terrorists of various hues now threaten to blow up, especially the Gwadar Port which has denied fishing rights to the local poor people who have taken to arms.
The fresh loan from the Industrial and Commercial Bank of China (ICBC) Ltd will help shore up Pakistan’s depleting foreign exchange reserves, Finance Minister Ishaq Dar said.
Dar said the total USD 2 billion is in effect Pakistan borrowing back the debt repayments it has made to Beijing for previously agreed loans.
He said Pakistan will need USD 5 billion in external financing to close its financing gap this fiscal year, which ends in June.
The new loan facility will be disbursed in three installments. The first one of USD 500 million has already been received by Pakistan’s central bank, Dar said in a tweet.
“It will increase forex reserves,” he said.
The money, which Dar said has been repaid by Pakistan to the ICBC in recent months, is crucial for the South Asian economy, which is facing an acute balance of payment crisis, with its central bank foreign exchange reserves dropping to levels of less than USD 3 billion, barely able to cover three weeks of imports.
Pakistan has already received a USD 700 million loan from China to help boost its forex reserves.
More external financing is expected after Islamabad signs a deal with the International Monetary Fund (IMF), which the minister said should be done by next week.
The global lender has been negotiating the deal with Pakistan since early last month to clear its ninth review, which, if approved by its board, will issue over USD 1 billion in tranches of USD 6.5 billion bailouts agreed in 2019.
“We will, God willing, take this country out of this quagmire,” Dar said, dismissing concerns of default risk.