According to state bank sources on Thursday, China has provided Pakistan a credit line worth $1.6 billion to rectify balance of payments crisis, the cash would be used to control the depleting foreign reserves.
Two State Bank sources told Reuters, the credit line comes after two countries agreed on currency swap between State Bank of Pakistan and China’s Central Bank. However, the sources said the currency swap has been increased to 20 billion yuan from the previous 10 billion yuan.
“The agreement has been finalized,” said one of the sources in the State Bank of Pakistan (SBP) seeking anonymity. The second source also confirmed the agreement and the figures.
Earlier it was confirmed by the Governor SBP Tariq Bajwa that China will assist Pakistan to stave off foreign currency depletion.
The government has been borrowing from China since past few years, they have borrowed $1.5 billion for the first 10 months of the current fiscal year 2018-19. Tariq Bajwa said Pakistan has obtained loans from China at very good rates.
According to the official documents China has provided the loan of $334 million for Orange Line Project Lahore, $273 million for Havelian Thakor project, $691 million for Sukkur Multan project and $88 million for the recently completed Neelum Jhelum hydropower project.
According to some officials in Islamabad, China is philanthropically providing loans to Pakistan despite financial crunch but doesn’t want the authorities to make the loan details public.
China also has $500 million in a safe deposit with SBP, Pakistan has previously returned Chinese deposit when the reserves reached desired position after graduating the IMF programme during the period of former Finance Minister Ishaq Dar in September 2016.