Pakistan is looking for US$3.3 billion from China Commercial Banking.
The government of Pakistan is looking to China to secure a USD 3.3 billion loan and to increase Pakistan's forex reserve to USD 14 billion to ensure that there is stability for the currency. As we told you in our earlier article and blogs, the Pakistani government has decided to devalue the currency to adjust PKR, reduce imports, and increase exports. This is a double-edged sword, as no one can tell which value will be efficient against the USD. Currently, PKR is trading at 284 against the USD, and Pakistan wants its exports to be competitive, as Pakistan is totally relying on remittance inflows from overseas Pakistanis.
This includes a $2 billion syndicated loan, which will be repaid to China after a year, and a $1.3 billion loan that will be released by China's commercial bank, as it was paid early this year. Pakistan has secured a loan from the Asian Development Bank, which was USD 800 million, and 500 million dollars was a grant for a USD 1 billion commercial loan. Pakistan has to ensure that China releases USD 3.3 billion by the end of this month; otherwise, Pakistan's benchmark via the IMF will be sabotaged. Pakistan does not want another fiasco or trust with the IMF like in late 2022 to mid-2023, when both of them had serious issues with each other and the United States had to resolve the issue by itself. Moreover, it is expected that the Chinese government will release US$3.3 billion, the amount for Pakistan, and Pakistan's forex reserve will reach near to USD 14 billion at the end of FY 2025.
