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Chinese bank deposits another $500m to Pakistan

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  • Ishaq Dar says SBP received the amount in its account.
  • Second disbursement part of $1.3 billion facility.
  • Finance czar hopes $500m will shore up forex reserves.

Pakistan on Friday received $500 million — the second disbursement of the $1.3 billion facility — from the Industrial and Commercial Bank of China (ICBC).

Federal Minister for Finance and Revenue Senator Ishaq Dar announced the development on his Twitter handle. 

He wrote: “State Bank of Pakistan has received today in its account from Chinese Bank ICBC $500 million. It will shore up the forex reserves of Pakistan. AlhamdoLilah!”

The second critical disbursement from the Chinese bank came after Pakistan completed the necessary documentation.

Earlier this month, the Chinese lender had approved a rollover of a $1.3 billion loan for Pakistan. 

Following the announcement, the Chinese bank deposited $500 million — the first disbursement — on March 4 which helped the foreign exchange reserves surpass the $4 billion mark.

The cash-strapped country has faced growing economic challenges, with high inflation, sliding forex reserves, a widening current account deficit and a depreciating currency.

Earlier, Dar — who took charge of the finance ministry in September last year — said that Pakistan has made payments of around $5.5 billion (excluding the $1 billion sukuk payment). These include $2 billion to China Development Bank and ICBC and $3.5 billion have been given to banks in other countries.

“Debt is usually rolled over but the debt stock does not reduce. We are reducing debt stock,” he had said. “Formalities with ICBC were completed last night. We returned $1.3 billion to it and this facility has been renewed and we will receive the amount back in three tranches.”

“We paid back $1.3 billion in three tranches — $500 million, $500 million and $300 million. We will receive it back the same way. Pakistan will get $500 million in two-three days. We might receive it on Monday. Then we will get an additional $500 million in 10 days.”

Foreign exchange reserves were at $4.3 billion as of March 10, just enough for less than a month of imports. While the liquid foreign exchange reserves stand at around $9.8 billion which includes $5.5 billion in net reserves held by commercial banks.

A report published in The News stated that a Chinese bank has given assurances it will provide another refinanced $500 million loan within the next few days, bringing the total of commercial loans up to $1.7 billion out of the total committed amount of $2 billion.

The Pakistani authorities are running from pillar to post to get 100% confirmation from friendly donor countries and multilateral creditors before moving toward striking a staff-level agreement with the International Monetary Fund (IMF).

It was the unwritten condition of the IMF that Pakistan must secure the refinancing of commercial loans as well as a rollover on deposits from China during the programme period, which is scheduled to expire in June 2023.

“Another $500 million commercial loan is coming from a Chinese bank,” a top official of the Finance Division confirmed on Wednesday and added that it would be done soon.

Chinese banks have already provided re-financing of $1.2 billion in commercial loans in the past few weeks, and now Beijing has given an assurance on another $500 million in loan re-financing in the next few days.

It is relevant to mention that Pakistan had also requested to grant rollover on the Chinese SAFE deposit of $2 billion within the ongoing month.

All these, the refinancing of commercial loans and rollovers on SAFE deposits, are pre-requisite for moving towards the signing of a staff-level agreement between the IMF and Pakistani side.

Now Pakistani authorities are anxiously waiting for confirmation from the Kingdom of Saudi Arabia, the UAE, and Qatar, as well as from the World Bank and the AIIB, for fulfilling their external financing needs of $6 billion until the end of June 2023.

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February 7, 2025: The value of the Pakistani Rupee (PKR) in relation to the US dollar is unchanged.

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KARACHI: The open market exchange rate between the US dollar and the Pakistani rupee (PKR) was Rs279.4 on February 07, 2025, with a selling rate of Rs281.1. The interbank exchange rate between the US dollar and the Pakistani rupee is Rs 278.45, according to Interbank.

There was no movement in the US dollar (USD) from the previous closure of Rs278.

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The NORINCO Group is invited by CM Sindh to explore opportunities.

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Chinese companies have been invited by Sindh Chief Minister Syed Murad Ali Shah to visit Karachi and other regions of Sindh Province in order to observe the quickly growing businesses and investigate prospects in fields like clean energy, infrastructure development, and public transit projects.

Speaking in Beijing to a delegation headed by the chairman of NORINCO International Co., Ltd., he stated that all facilities required would be provided by the governments of Sindh Province and Pakistan.

With assistance from NORINCO International, the Sindh Chief Minister stated that the Provincial Government will firmly urge North Vehicle and BeiBen to think about setting up a Vehicle Assembly Plant in the Dhabeji Special Economic Zone.

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A deal with Pakistan to fight financial crimes has been approved by the Saudi cabinet.

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In order to strengthen collaboration in the fight against money laundering, terrorist financing, and associated crimes, the Saudi Press Agency announced this week that the Saudi cabinet, led by Crown Prince Mohammed bin Salman, had approved a memorandum of understanding (MoU) with Pakistan’s Financial Monitoring Unit (FMU).

Due to its severe money laundering and terrorism funding issues in recent years, Pakistan was added to the Financial Action Task Force’s (FATF) grey list in June 2018.

The nation was taken off the gray list in October 2022 after enacting extensive measures to fortify its financial system.

The FMU is Pakistan’s financial intelligence unit, created under the Anti-Money Laundering Act of 2010 and tasked with collaborating with foreign partners and evaluating reports of suspicious transactions.

According to the SPA, “the cabinet approved a memorandum of understanding regarding cooperation in exchanging investigations related to money laundering, terrorist financing, and related crimes between the Financial Monitoring Unit in the Islamic Republic of Pakistan and the General Department of Financial Investigation at the Presidency of State Security in the Kingdom of Saudi Arabia.”

The MoU is an indication of Saudi Arabia and Pakistan’s growing strategic partnership. A significant Pakistani diaspora resides in the Kingdom, and numerous Pakistani businesses have established a presence there.

Saudi Arabia has been a key supporter of Pakistan’s economy, bolstering its reserves with substantial deposits in the State Bank of Pakistan and offering deferred oil payment facilities.

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