China lends $1 billion to pakistan to boost plummeting foreign currency reserves

A currency trader counts Pakistani Rupee notes as he prepares an exchange of U.S dollars in Islamabad, Pakistan December 11, 2017. REUTERS/Caren Firouz

Vastavam web: China has lent Pakistan $1 billion to boost the South Asian country’s plummeting foreign currency reserves, two sources in Pakistan’s finance ministry told , amid growing speculation of another International Monetary Fund bailout.The latest loan highlights Islamabad’s growing dependence on Chinese loans to buffer its foreign currency reserves, which plunged to $9.66 billion last week from $16.4 billion in May 2017.The lending is the outcome of negotiations for loans worth $1-$2 billion that was first reported in late May, the two sources told

The finance ministry spokesperson did not respond to a request for comment.With the latest loan, China’s lending to Pakistan in this fiscal year ending in June is set to breach $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. During this period Pakistan also received $2.9 billion in commercial bank loans mostly from Chinese banks, ministry officials told.

But analysts say China’s help will not be enough and predict that after the July 25 national election the new administration will likely seek Pakistan’s second bailout since 2013, when it received a package worth $6.7 billion from the IMF.