Pakistan has borrowed $1 billion from its neighbor China to boost its plummeting foreign currency reserves, sources in Pakistan’s finance ministry told Reuters.
The latest loan only highlights Pakistan’s growing dependence on Chinese loans to respire its foreign currency reserves, which plunged to a worrying $9.66 billion last week from $16.4 billion in May. The lending is the outcome of negotiations for loans worth $1-$2 billion that was first reported by Reuters in late May, the two sources told Reuters. “Yes, it is with us,” said one finance ministry source, in reference to the Chinese money. The second source added that the “matter stands complete”.
With the latest loan, China’s lending to Pakistan in the fiscal year that ended in June breached $5 billion. In the first 10 months of the fiscal year China lent Pakistan $1.5 billion in bilateral loans, according to a finance ministry document seen by Reuters.