China has again given a billion dollar debt to the financial crisis. Foreign exchange reserves are continuously decreasing in Pakistan’s treasury, and it is anomaly that only a few weeks’ worth of imports are left over.
Two sources of the Pakistan Finance Ministry have confirmed this loan from the news agency Reuters. It is being said that Pakistan can once again go into the International Monetary Fund.
Earlier, Pakistani central bank governor Tariq Bajwa had said in an interview to the Financial Times that Pakistan had borrowed a billion dollars in April from the Chinese banks. Bajwa had said, “This loan has been taken from China-backed banks at competitive interest rates.”
The Pakistani newspaper Dawn says that this duty has once again become clear that the dependence of Pakistan on China is increasing constantly.
Exhaustive Foreign Exchange Reserves
According to Dawn, last week Pakistan’s foreign currency declined to $ 9.66 billion, which was $ 16.4 billion in May 2017. However, in view of 2017, Pakistan’s foreign exchange reserves were $ 18.1 billion by April 2016.
Along with this loan, Pakistan has taken more than five billion dollars from Pakistan in this fiscal year.
Reuters has told Pakistan’s Finance Ministry documents that in the first 10 months of this financial year, China has paid $ 1.5 billion to Pakistan.
At the same time, Pakistan paid $ 2.9 billion from several commercial banks. Reuters say most of the banks are from China.
Many economic analysts say that China does not want Pakistan to be trapped in a serious economic crisis, as it will have an impact on its ambitious project China Pakistan Economic Corridor (CPC).
The CPEC project is about 60 billion dollars. However, many experts believe that this loan from China is not enough to reduce the crisis in Pakistan.
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13th time in the shelter of IMF
Elections in Pakistan are on July 25 and it is being said that the new government will once again have to go to the IMF just like in 2013. In 2013, IMF had provided financial assistance of $ 6.7 billion to Pakistan.
According to the Financial Times report, Pakistan has been in the refuge of the International Monetary Fund since 1988 till now 12 times.
Imran Khan, the head of the Pakistan Tehrik-e-Insaf party, has also indicated that if he comes to power by winning the elections, then he will approach the IMF. This time Pakistan will go for IMF 13 times for help.
Pakistan’s economy is surrounded by all-round crises. The balance of imports and exports has become worse. According to Pakistan’s Central Bank report, Pakistan’s current account deficit has reached $ 14.03 billion in the first 10 months of the current financial year.
According to the State Bank of Pakistan, the deficit during the last financial year was $ 9.35 billion.
It is being said that due to the rising cost of crude oil, Pakistan’s current account deficit will reach $ 16 billion Pakistan’s economy is fully dependent on imported petroleum.
Pakistan has devalued its currency three times in the past six months in order to reduce the deficit. It is being said that the depreciation of the Pakistani rupee increased the exports, but there was no shortage of imports.
According to the central bank of Pakistan, in the first 10 months of this financial year, Pakistan’s current account deficit stood at $ 14.03 billion, which is about $ 2 billion more than the previous fiscal year’s losses.
China is happy to give a loan?
Many analysts say that while Pakistan is severely trapped in financial crisis, China still feels happy after paying the debt. That’s because China does not want Pakistan to pay much money in China Pakistan Economic Corridor, it is public.
Under the CPEC project of nearly $ 60 billion, China is developing infrastructure in Pakistan. The report of the Financial Times says that China has always been reluctant to make public the debt to the public under this project.
Economists of Pakistan believe that the debt problem from China is not a solution. Mushtaq Khan, former economist of the Central Bank of Pakistan, told the Financial Times, “Pakistani policy makers are not taking any concrete steps to reduce economic losses. They are just trying to reduce the gap of the damage. China can not solve our problem. ”
American President Donald Trump has also taken a tough stance against Pakistan. The US has almost stopped financial help given to Pakistan.
Its effect was that Pakistan’s reliance on China increased. According to the Stockholm International Peace Research Institute report, Pakistan imported $ 51.4 million of weapons from China last year, whereas weapons worth US $ 21 million were sold from the US.
All the eggs in the same basket?
It is being said about the CPEC project that Pakistan has put all the eggs in one basket and if the eggs break, no one will survive.
The CPEC is talking about a solution to Pakistan’s energy crisis, but there are several types of problems. According to Bloomberg’s report, China is compelling Pakistan to buy Chinese equipment in its project. China is increasingly increasing debt due to Pakistan and Pakistan is facing more trouble.
According to Bloomberg’s report, foreign debt on Pakistan has become $ 91.8 billion. Almost five years ago Nawaz Sharif took oath as the Prime Minister of Pakistan, since then it has increased by 50 percent.
Pakistan and its GDP ratio has reached 70 percent. Many analysts say that two-thirds of China’s debt is at a high interest rate of seven percent.