Pakistan is struggling with its worst economic crisis in decades with its foreign exchange reserves, at their lowest in 10 years. China and Iran have come forward to help the crisis-hit Pakistan to come out of the financial collapse, while the International Monetary Fund (IMF) is delaying unlocking the next tranche of a $6.5 billion loan.
The country has been modifying its policies according to the conditions laid down by IMF, in an effort to get funding. The Washington-headquartered financial body has suggested raising tax revenues and a fairer distribution of precious resources by taking subsidies away from people who don’t need them.
Following this, the national assembly of Pakistan unanimously approved the government’s Finance (Supplementary) Bill 2023 or ‘mini-budget’, and increased taxes on luxury goods and services. The country has also raised the prices of fuel, and essential commodities, making it difficult for common people to fulfill their basic needs.
Amid this unstable economic situation, Iran is promoting trade with Pakistan, while China will grant a new $700 million loan to the country.
China lends $700 loan to shore up foreign reserves
This week, Pakistan will receive a new $700 million loan from China to help shore up its foreign exchange reserves, the country’s finance minister said on Wednesday, in another step to help the South Asian nation recover from an economic crisis, according to Reuters.
The credit facility, made through the state-owned China Development Bank will boost Pakistan’s forex reserves by about 20% and comes as the country is thrashing out a deal with the International Monetary Fund (IMF) to unlock funds from a $6.5 billion bailout.
China is already Pakistan’s single largest creditor with its commercial banks holding about 30% of its external debt.
Iran promotes trade with Pakistan amid financial crisis
Iran has established six border markets to promote trade with crisis-hit Pakistan, said Iranian Consul General Hasan Noorain as quoted by pkrevenue. In the last 10 months, the volume of bilateral trade reached $2 billion dollars, he said, adding that the target has been set at $5 billion.
Noorain also said that trading is facing difficulty due to the absence of a banking channel. He added that the visa policy has also been relaxed, and progress is also being made in barter trade with Pakistan.
He said that Pakistan and Iran have friendly relations, however, the trade between the two sides has not developed as it should have so far.
Culled from Livemint
