As a result of China granting Pakistan a one-year rollover of $1 billion in SAFE (State Administration of Foreign Exchange) deposits, central bank reserves are predicted to remain in the $8.7 billion range this week.
According to earlier today’s reports in local media, the deposit was due to mature at the end of July, but China agreed to refinance $1 billion, effectively meeting the pre-conditions for external financing imposed by the International Monetary Fund for securing finances of maturing loans.
1st SAFE Deposit Rollover Approved by China
The first SAFE deposit rollover, worth $1 billion, was approved by China in 2022–2023 and is due during the third week of this month. According to additional investigation, the cash-strapped economy was supposed to pay the Chinese deposit $1 billion in principal, plus $33 million in interest. The rollover of the principal has now been accomplished.
The rollover occurs a few days after Pakistan’s federal cabinet’s Economic Coordination Committee discussed and agreed a plan to ask China to extend by two years the deadline for repayment of Pakistan’s publicly guaranteed debt of more than $2 billion.
It is important to note that as of the end of December 2022, Pakistan’s external debt stock was $100.52 billion, of which $29.59 billion was financed by China.
To read our blog on “China provides Pakistan with a huge loan of $1 billion,” click here.
