China pledges to lend $2 billion to Pakistan

January 2, 2019 - 20:25

TEHRAN - China has pledged to lend at least $2 billion to Pakistan to shore up its foreign exchange reserves and prevent further devaluation of rupee against the dollar, Financial Times reported, quoting sources.

The financial support comes as the Imran Khan led government in Islamabad struggles with a weak fiscal position, high debt repayments and dwindling reserves.

“China’s promise to Pakistan is an indication of their commitment to help us avoid a crisis. If the rupee falls sharply and we need to prevent its slide, we can turn to China,” the report quoted a senior government official saying.

The promised aid comes at a time when the two countries are forging close political, diplomatic and economic ties and Islamabad is negotiating with International Monetary Fund (IMF) for a $7bn bailout.

Pakistan’s finance ministry and the IMF are due to resume discussions later this month on details of the package, the report stated.

Last months, Chinese Consul General to Pakistan Long Dingbin said Beijing is investing in multiple sectors and launching business ventures, instead of providing loans, in order to “boost Pakistan's economy”.

The official said that during Prime Minister Imran Khan's visit to China, the two countries signed 15 new agreements which will lead to increased cooperation in the business sector.

He further said the new ventures that were being launched would broaden the scope of the China-Pakistan Economic Corridor (CPEC).

The Chinese consul general claimed that China would “never leave Pakistan in a lurch” and will provide “maximum resources” to ensure that it can strengthen its wavering economy.

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