Pak loan reliance on China increases manifold

ISLAMABAD: In the aftermath of the slowdown of disbursements from all other multilateral and bilateral creditors, Pakistan’s reliance on China has increased manifold. Islamabad has so far obtained $4.4 billion from Beijing in shape of both bilateral as well as commercial loans from the Chinese banks during first 10 months (July-April) of the current fiscal year.

Alone in April 2018, Pakistan had no other option but to get $1.2 billion commercial loan from Chinese banks at a time when all other bilateral and multilateral creditors disbursed just $172 million. On the bilateral creditor front, China again became the largest loan provider as it disbursed $228 million loan just in one month (April 2018) for execution of different projects in Pakistan.

If China provides $1billion to $2 billion more as safe deposits in the coming days to shore up the dwindling foreign currency reserves then Beijing’s overall financial support might cross $6.5 billion for the whole financial year in 2017-18.

Despite this increased inflows from China, Pakistan will not be able to manage its yawning current account deficit (CAD) in the wake of rising imports and inability to boost exports so the foreign currency reserves continue to decline in the outgoing fiscal year.