Pakistan has received much-needed support from China in the form of loans worth $1.3 billion.
State Bank of Pakistan (SBP) has confirmed that it received inflows from Chinese banks which enhanced its foreign exchange reserves by $3 billion since June 23 this year including recent loans of $1.7 billion from different banks.
With the fresh injection of funds, foreign exchange reserves surged to $19.75 billion including the reserves of SBP which stood at $12.98 billion and reserves maintained by commercial banks at $6.78 billion.
The improved foreign exchange reserve situation will provide enough support to rupee’s exchange rate versus the US dollar which recently depreciated to a new level. On the other hand, the payment of debt-servicing will ease off its effects on the reserves in the coming weeks.
The government is working to ensure inflows from various banks and countries to maintain stable reserves. It succeeded in the deferment of the loan payments to the Paris Club and G20 countries due to the COVID-19 outbreak which has wiped off economic gains of the country in recent months.
Besides loans, the government should improve its inflows of foreign exchange through exports and remittances to stabilize its currency position against the Dollar.