Months after rolling over a USD 4.5 billion loan that was scheduled to be repaid this year, China has raced to help Pakistan once more by providing USD 2.5 billion in assistance to support the rapidly declining foreign exchange reserves of its cash-strapped all-weather partner.
China’s promise of support came after France and Pakistan agreed to suspend their USD 107 million loan as part of the G20 Debt Service Suspension Initiative (DSSI).
According to a statement released by Pakistan’s Economic Affairs Division on Monday, the agreement was signed by French Ambassador Nicolas Galey and Ministry of Economic Affairs Secretary Mian Asad Hayaud Din.
“China and Pakistan are all-weather strategic cooperative partners. China always supports Pakistan in growing its economy, improving livelihoods and upholding financial stability, Chinese Foreign Ministry spokesman Zhao Lijian told a media briefing here while replying to a question about China providing RMB 15 billion (USD 2.3 billion) to Pakistan to build its depleting foreign exchange reserves.
According to Pakistani media, Prime Minister Shehbaz Sharif expressed optimism that Pakistan would get USD 2 billion from the IMF.
China’s most recent support comes on top of Beijing deferring payment of a USD 4.5 billion debt that Islamabad was supposed to pay in March of this year and a USD 2.5 billion donation made in 2019 to enhance Pakistan’s declining foreign exchange reserves.