The IMF deal is inches away, but having an additional cash inflow worth over USD 2 billion was always going to help.
By Staff Reporter
ISLAMABAD: With Pakistan well on its way to having the International Monetary Fund (IMF) revive a stalled bailout package it urgently needs, news came on Wednesday that a consortium of Chinese banks has thrown Islamabad a credit line of over USD 2 billion.
“The Chinese consortium of banks has today signed the RMB 15 billion (~$2.3 billion) loan facility agreement after it was signed by the Pakistani side yesterday”, Finance Miniter Miftah Ismail said in a tweet Wednesday. “Inflow is expected within a couple of days. We thank the Chinese government for facilitating this transaction.”
The encouraging news comes on the quick heels of reports that the authorities have bridged their differences with the Fund staff over revenue and expenditure targets for the coming fiscal. Reports to this effect saw Pakistani interbank markets rally, with rupee starting to gain some ground lost against the dollar over the past couple of weeks in the early morning trading.
Gutted by four years of mismanagement on top of its chronic imbalances and a crippling debt burden, Pakistan’s economy needs immediate corrective action – which was the main theme of Minister Ismail’s discussions with the Fund staff.
On the other hand, the country needs fiscal space to provide relief to the masses who are groaning under the burden of sky-high inflation. Revival of the Fund program was expected to greatly help towards that end.
The coalition government headed up by Prime Minister Shehbaz Sharif is working on war footing to set things right.
Likely the result of a backup strategy set in motion by the government, the cash injection from the Chinese banks will allow the government additional wriggle room.
Together, the two back-to-back developments should put to rest the fears that Pakistan is nearing default on its external obligations, and lift the pall that has hung over the markets for months now.
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