Standard Chartered Bank has decided to give $200 million in loans to Pakistan. In order to help Pakistan get out from the economic crisis, Standard Chartered has made this offer. The bank through this loan will finance the liquefied natural gas (LNG) imports in Pakistan.
Officials in the Ministry of Finance and Economic Affairs informed that in the last couple of years Standard Chartered London’s exposure to Pakistan has gone up by more than $1.1 billion. The loan is taken as per 1 year floating London Interbank Offered Rate (Libor) in addition to 1.4%. The total cost at the present Libor rate gets more than 4.2%.
Standard Chartered Pakistan has made no comments on the terms of the deal. Ministry officials claimed that the deal could lead to further financing.
The loan will be used to finance the LNG imports in the country. The imports are increasing as fuel power plants were set up. Pakistan has imported almost $2.5 billion worth of LNG to run the power plants. According to the Pakistan Bureau of Statistics (PBS) compared to last year, this is 87% higher.
China has also agreed to provide $2 billion in loans to Pakistan to bring stability to a country’s economy. It has also helped in the strengthening of Rupee against the dollar.
By 27th July, post-election State Bank of Pakistan’s reserves went up to $10.35 billion from $1.339 billion. But this is a short-term solution. Pakistan needs self-financing projects, startups, human & infrastructure development for a long-term solution. The loan will just add the debt and worsen Pakistan’s economy. We need to depend on our own resources to solve our own problems.