China rescued Pakistan amid delay in IMF deal: PM Shehbaz

Amid an "unusual delay" in the agreement between Pakistan and the International Monetary Fund (IMF), Prime Minister Shehbaz Sharif Tuesday praised China for rescuing Pakistan during tough times.

During a ceremony in Islamabad for signing a memorandum of understanding (MoU) between Pakistan and China for the 1,200 MW Chashma-5 (C-5) nuclear power project, the premier said: “The agreement with the IMF has been unusually delayed and China once again came to our rescue."

The country has barely enough currency reserves to cover one month's imports. It had hoped to have $1.1 billion of the funds released in November — but the IMF has insisted on a number of conditions before it makes any more disbursements.

Consequently, Pakistan hoped China would continue to ease its payments pressure by extending loans as concerns arose that the South Asian nation could become the next emerging market to default.

The nation plans to repay a $300 million loan to China on Friday and another $1 billion loan will be rolled over by June 30, State Bank of Pakistan Governor Jameel Ahmad said earlier. Pakistan also returned a separate $1 billion loan to China recently, which was refinanced last week.

“When Pakistan is faced with economic challenges, and we are also engaged with IMF to finalise the ninth review and met all conditions required by the IMF, China once again came to our help,” PM Shehbaz said.

Chinese support comes as odds are that the cash-strapped nation will fail to restart its loan programme —with the lender — that expires at the end of June. The country has pledged to repay its debt and faces about $23 billion of external debt payments for the fiscal year that starts in July.

China has extended loans annually to Pakistan for many years. The central bank expects debt of $2.3 billion to be rolled over in June after Chinese banks extended another $2 billion in March.