Dar confirms rollover of $2bn China loan, says issue is ‘no longer pending’

Finance Minister Ishaq Dar on Friday confirmed that a $2-billion loan from China has been rolled over and the matter is “no longer pending”, denying reports that talks were still in progress.

“I want to confirm that the $2-billion deposit from China, which was due on 23 March, is no longer pending,” said Dar, while answering a query raised by Pakistan Peoples’ Party (PPP) Senator Raza Rabbani in Parliament.

“Moreover, the documentation (of this loan) for 2023-24 is also completed” he said.

Earlier, Reuters reported that China is still working on a request by Pakistan to roll over the loan that matured last week, citing a top finance ministry official.

“It is a work in progress,” Reuters quoted the official as saying, on condition of anonymity. “Formal documentation is underway” and a formal announcement will be made, they had added.

But Dar said the report was “totally speculative”.

The rollover was critical for the South Asian nation as its foreign exchange reserves have dipped to just four weeks worth of imports at a time when it is locked in talks with the International Monetary Fund (IMF) to secure bailout funds.

On Thursday, the SBP reported that its foreign exchange reserves have decreased $354 million, clocking in at $4.2 billion as of March 24. This was the first decline after almost one-and-a-half months.

Technical-level talks with IMF are over: Ishaq Dar

Meanwhile, Dar explained that Pakistan conducts two types of business with China.

“One is the SAFE deposit, which is a business between the central bank of China and the central bank of Pakistan (State Bank of Pakistan), which is a sovereign business.”

“The second business is with the commercial banks of China including Industrial and Commercial Bank of China (ICBC), Bank of China, and China Development Bank,” he said.

As Pakistan struggles to avert a default on its obligations, the only help so far has come from longtime ally Beijing.

Earlier this month, Dar confirmed the country’s central bank had received $500 million from ICBC. This transfer was the second disbursement of $500 million for Pakistan as part of a US$1.3b rollover facility from the institution.

China Development Bank had also refinanced a $700-million loan in February, bringing the total facility from Chinese institutions to $2 billion.