Beijing, July 3: In another show of its camaraderie, China has lent Pakistan a whopping $1 billion to boost the latter's plunging foreign currency reserves, a couple of sources in Pakistan's finance ministry reportedly told Reuters. Speculation was rife that the International Monetary Fund (IMF) will come to the rescue of the election-bound South Asian state.
China's latest generosity towards its old ally reiterated the latter's growing dependence on Beijing to buffer its foreign currency reserves that plummeted to less than $10 billion last week from over $16 billion in May last year, the Reuters report added.
China's latest lending has come following negotiations for a loan between $1 and $2 billion, which was first reported by Reuters in May, the twin sources told Reuters. The latest loan meant China's lending to Pakistan in the fiscal ending June is set to cross $5 billion.
According to the Reuters report, China gave Pakistan $1.5 billion in bilateral loans while Pakistan also received $2.9 billion in commercial bank loans mostly from Chinese banks during the same fiscal, its finance ministry officials said.
Analysts, however, predict that even the Chinese help will not be enough for Pakistan's ailing economy and the new administration that comes after the July 25 national election in the country is likely to rush to the IMF for a fresh bailout since 2013, when it procured a package worth $6.7 billion, the Reuters report added.
China's efforts to help Pakistan's economy comes in the wake of the former's promise to financially support Pakistan's power and road infrastructure as part of the $57bn China-Pakistan Economic Corridor worth $57bn, which is a key component of the Belt and Road Initiative.