Near-Broke Pakistan to Ask For Loans Worth US$5bn from Other Nations

The Pakistan government has decided to seek loans worth $5 billion from countries including China, Russia and Kazakhstan in a desperate attempt to stabilise the shrinking foreign reserves.

As per the details, Pakistan plans to seek $3 billion from China and $2 billion from Russia and Kazakhstan.

The federal ministry of finance has finalised the plan for the loan, agreement of which is expectedly to be signed during the visit of Prime Minister Imran Khan to China later this month.

Sources revealed that Islamabad plans to borrow $3 billion from China to stabilise its forex reserves, while additional $2 billion from Russia and Kazakhstan would be spent on the ML-1 Railways project.

The loan agreements will be signed for a period of one year, with flexibility of extension and re-adjustment.

It is pertinent to mention here that Pakistan has been striving to revive the suspended loan programme worth $6 billion from the International Monetary Fund (IMF).

Islamabad has been working towards completing the conditions put forth by the IMF, prior to its next scheduled meeting on 02 February 2022 with IMF’s Executive Board.

Pakistan’s economic crisis has been swelling with the country’s gross financing needs, standing at an estimated $30 billion for the fiscal year 2022-23. This has forced the Imran Khan led government to be left with no other option but to go back to the IMF, seeking a fresh loan programme, after the current programme ends in September 2022.

As per sources in the government, Pakistan’s efforts to complete the conditions to revive the $6 billion IMF programme under the Extended Fund Facility (EFF) and complete the requirements of the sixth review will require to complete more conditions for the seventh and eighth review till September 2022.

The accomplishment of all requirements is pivotal for Pakistan to qualify for the completion of 39-month EFF programme.

Pakistan’s next stop for another loan facility will be the Breton Woods Institutions (BWIs) as the country continues to struggle to tackle its financial crunch.