$2bn loan: China says will continue to help Pakistan

BEIJING: A Chinese foreign ministry’s spokesperson Wednesday said China, through trade, investment, and all-round practical cooperation, would continue to provide assistance for the economic and social development of Pakistan.

“China and Pakistan are all-weather strategic partners of cooperation. The Chinese side has offered and will continue to offer its best through assistance, trade, investment and all-around practical cooperation to support and boost Pakistan's economic and social development,” Lu Knag said during his regular briefing which resumed after the New Year’s holidays.

When asked to confirm that China had offered to give Pakistan US$ 2 billion in aid to support its foreign currency reserves, he said the two sides had always maintained close communications on relevant cooperation.

According to a media report, China had agreed to lend at least US$ 2 billion to Pakistan to shore up its foreign exchange reserves.

The report, quoting two senior Pakistan government officials, said the loan is aimed at helping with a weakening fiscal position and high debts.

“China’s promise to Pakistan is an indication of their commitment to help us avoid a crisis. If the rupee falls sharply and we need to prevent its slide, we can turn to China,” a senior government official in Islamabad was quoted as saying by FT.

According to Daily Jang reporter, the loan will be commercial and Pakistan will have to pay 8 percent interest on it. China has decided in principle that an economic package will be given to Pakistan. Discussions are going on in this regard.

Pakistan is also in talks with the International Monetary Fund (IMF) for a financial bailout package.