ISLAMABAD: China has rolled over a $600 million loan to Pakistan, helping shore up Islamabad’s foreign exchange reserves after the International Monetary Fund (IMF) approved a long-awaited deal earlier this month, Prime Minister Sheh­baz Sharif said on Tuesday.

“We have received an­other $600m from our friend China,” he said at an event in Islamabad.

China had already rolled over more than $5 billion in loans to Pakistan in the last three months as the country struggled to revive a stalled loan programme with the IMF.

As the government’s negotiations with the IMF drag­ged on for months, the country’s foreign exchange reser­ves fell to precariously low levels, barely enough to pay for a month of controlled im­p­­orts, and an acute bala­nce of payment crisis pushed the country to the brink.

Meets Asif Zardari, Bilawal amid pre-poll consultations; reiterates call for national unity on charter of economy

The government finally secured a $3bn bailout on June 30 from the IMF, whose board green-lighted the deal last week. The Fund later disbursed an initial instalment of about $1.2bn.

However, Mr Sharif, spe­a­king at the launch of the Prime Minister’s Youth Spo­rts Initiative in Islamabad, said that as the country’s foreign exchange reserves increased, “we want to do it not through loans but by generating our income”, Radio Pakistan reported.

“It is possible as our youth has the potential to excel and take the country forward in sports, information technology, industries and agriculture.”

Paying tribute to athletes for bringing glory to Pakistan through their performances, the prime minister said that Rs5bn had been allocated in the budget to promote sports.

The sports initiative for the youth included the establishment of a sports endowment fund, the country’s first sports university in Islamabad, the Elite Sportsperson Development Programme, and measures to promote both traditional and e-sports.

Consultation with allies

Meanwhile, PM Shehbaz met PPP Chairman Bilawal Bhutto-Zardari and party leader Asif Ali Zardari at the Prime Minister’s Office as part of consultations with his ruling allies to form a caretaker set-up ahead to hold general elections in November.

The premier was accompanied by Finance Minister Ishaq Dar and Minister for Economic Affairs Sardar Ayaz Sadiq, the PMO said.

It was the prime minister’s third meeting with the heads of the main ruling ally PPP in two weeks.

Former president Mr Zardari also met PM Shehbaz in late June in Dubai, where PML-N supremo Nawaz Sharif had also joined them.

PPP leader Qamar Zaman Kaira, who is also the premier’s special assistant, said on Monday that PM Shehbaz had started consultations with coalition partners to finalise the name of a caretaker prime minister, who will be at the helm for three months to hold elections in the country.

Islamabad SEZ

The premier also performed the groundbreaking of the Islamabad Model Special Economic Zone on Tuesday. Speaking at the event, he said most of the time of his coalition government was spent on repairing the damages done by the previous government and stressed the need for unity of the nation on a charter of economy to ensure policy consistency.

In the recent past, the idea of a charter of the economy was floated by the incumbent dispensation in Islamabad, notably PM Shehbaz, before the last year’s budget and not too long after its ascension to power following the ouster of former premier Imran Khan through a no-confidence vote in April 2022.

The idea focuses on all stakeholders collaborating on formulating a framework for improving the economy.

Reiterating the call on Tuesday, he said: “Now we will have to get rid of loans and attract investment. This is what the model special economic zone is for — to attract investment from China, the UAE, Qatar and others to bring Pakistan on a par with the neighbouring nations,” he added.

Later, the premier conveyed gratitude to the UAE president for his support to the economic and financial stability of Pakistan, including a deposit of $1bn with the State Bank of Pakistan, the PMO said in a statement.

Published in Dawn, July 19th, 2023