ISLAMABAD: The cash-strapped Pakistan’s economy received a major boost on Thursday when China’s consortium of banks approved a loan of $2.3 billion (Dh 8.44 billion) for the country. A day earlier too, the market sentiment took a U-turn when it received the positive news of an imminent deal with the IMF.
Both the deals have reversed the rupee downward slide and on Thursday, according to the Forex Association of Pakistan, the value of Pak Rupee was appreciated by Rs4 against the US dollar and reached Rs206.50 from the previous day’s closing rate of Rs210.50.
Another good day
Islamabad’s local currency dealers have termed Thursday another good day for the economy and predicted that the local currency would continue its recovery in the days to come.
On average, the price of the dollar is expected to go down by Rs8-Rs10 once the country receives the tranche from the IMF as well as China’s banks.
Miftah Ismail on Wednesday in a tweet had announced the news of the deal with the Chinese banks saying the RMB 15 billion ($2.3 billion) loan facility is expected within a couple of days.
“We thank the Chinese government for facilitating this transaction,” he further said.
IMF to issue ‘good health certificate’
Pakistan urgently needed a deal with the IMF to restore the stalled $6 billion (Dh 22.03 billion) assistance package but was also required to enter dialogues with other monetary forums and friendly countries for financial support.
They wanted Pakistan to remain committed to the International Monetary Fund (IMF) loan programme and get the much-need ‘good health certificate’ from the agency.
Last month, the Asian Development Bank (ADB) too indicated providing $2.5 billion (Dh 9.18 billion) in additional loans to Pakistan, but made it clear that the government would have to secure a good economic health certificate from the IMF.
The ADB statement was issued after a meeting between Minister of State for Finance and Revenue Dr Aisha Ghous Pasha and the Country Director of the ADB, Yong Ye.
A bitter pill
In return for the IMF deal, the Pakistan government accepted some tough conditions and increased the prices of the petroleum products which unleashed a spell of inflation and price hike across the country.
The Shehbaz Sharif-government blames the previous government of Imran Khan for this bitter pill it has to swallow now.
Among the tough measures, the government has agreed to impose 1pc poverty tax on firms earning PKR 150 million (Dh 26,215), 2pc on those earning PKR 200 million (Dh 34,954) 3pc on over PKR 250 mil-lion (Dh 4.36 million) and 4pc on PKR 300 million (Dh 5.243 million) and above. In the original budget, the government had set a 2pc poverty tax only on those earning PKR 300 million and above.
The government also agreed to do away with the subsidies on electricity bills granted by the Imran Khan government days before their departure.