Beijing: China has reportedly agreed to provide $6 billion in aid to Pakistan to minimise the cash-strapped country’s dependence on an IMF bailout package as Prime Minister Imran Khan held talks with Chinese President Xi Jinping. Khan, who was on his maiden visit, met Xi in the Great Hall of People where the two leaders also held one- on-one meeting besides delegation-level talks, Pakistani media reports said. A loan of $1.5 billion is also expected to be offered, along with an additional package of $3 billion for the China-Pakistan Economic Corridor (CPEC), the report said. The loan and the investments were reportedly part of the $6 billion package. There is no official comment from Beijing yet on the report.
Pakistan’s government has “inherited a very difficult economic situation,” Khan told Xi. “Unfortunately our country is going through a low point at the moment with two very big deficits, a fiscal deficit and a current account deficit,” he said. Xi assured Khan that China considers its relations with Pakistan a “diplomatic priority. China has always placed Pakistan as a diplomatic priority for China, supported Pakistan’s safeguarding of national independence, sovereignty, and territorial integrity, and supported the new Pakistani government’s smooth running of the government and advancement of national construction,” the Chinese President said.
China’s expected assistance is the second $6 billion package which Khan has managed to obtain in the last few weeks as Pakistan reeled under severe financial crisis. During his visit to Saudi Arabia last month, Riyadh committed $6 billion in funding which included $3 billion in deferred payments for crude oil imports.
Finance minister Asad Umar, who accompanied Khan, earlier told media in Islamabad that Pakistan’s strategy was to seek loans from multiple sources instead of asking the International Monetary Fund (IMF) alone to plug the entire gap in the country’s financing needs. He said Pakistan faced a deficit of $27 billion which included $9 billion debt repayment this year.
“After taking monetary and fiscal measures, in my opinion, our financing gap for this year will be around $12 billion,” he said. According to a report in the Hong Kong-based South China Morning Post, Pakistan had borrowed $6 billion from China last year too to increase its dwindling foreign reserves.
