‘Proof of great friendship’: China to send Pakistan another $1.3 billion

Pakistan is set to receive a $1.3 billion financing boost from the Industrial and Commercial Bank of China Ltd (ICBC) in the coming days, according to the country’s Finance Minister, Ishaq Dar. Speaking at a press conference in Islamabad on March 3, Dar confirmed that all formalities had been completed and that documentation for the process was now complete.

The fund will be used to help shore up Pakistan’s foreign exchange reserves as the country faces challenging economic conditions. Dar confirmed that it was possible that $500 million could be received by Monday or Tuesday of next week, with a further $500 million to be provided within the following 10 days.

Dar reported that the State Bank of Pakistan (SBP) had $3.82 billion in foreign exchange reserves, which, when added to the sums held by commercial banks, totaled almost $9.26 billion.

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“There will be a further increase in this. I think China has given proof of great friendship,” Dawn quoted Dar as saying.

He said he was confident that the SBP reserves would have $10 billion and the national reserves around $16 billion by June 30. As per Dar, Pakistan’s requirement for the next three to four years is for $16 billion.

Despite the difficult economic climate, Dar was optimistic about Pakistan’s ability to weather the storm, stating: “We have never defaulted and we won’t now. Yes, we were in a precarious situation and are going through it currently.”

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He went on to defend the current government’s handling of the crisis, stating that its “principled decision” to prioritise the state’s interests over political interests was the “right decision”. Dar criticised opposition leader Imran Khan, accusing him of being “selfish” and focused only on criticising the government rather than working together to address the country’s issues.

Dar also took the opportunity to discuss the economic indicators that Pakistan had faced in recent years, blaming “mismanagement and bad governance” for the current situation. He attributed catastrophic floods in 2022 as being a major cause of financial losses, with over $30 billion lost as a result. He also cited global inflationary pressure as a major reason for the country’s rising inflation levels.