China to roll over $500 mn loan to State Bank of Pakistan for one more year

China has agreed to roll over a loan of $500 million that it has placed with the State Bank of Pakistan as Islamabad's official foreign currency reserves remain in a precarious position despite taking $44 billion in loans in the past five years.

The Express Tribune reported that the People's Bank of China, through China's State Administration of Foreign Exchange (SAFE), had deposited $ 500 million with the SBP in June 2012.

The loan is going to mature in the first week of June this year, but China has agreed to roll it over for one more year, said sources in the ministry of finance.

Pakistan cannot use the $500 million Chinese deposit and its only purpose is to shore up foreign currency reserves.

According to sources, the loan has been rescheduled at the same old terms. Since the money could not be utilised, the interest rate was only 1 per cent, they said.

During the week ended May 18, the SBP's gross reserves dropped $ 479 million to only $10.32 billion due to payments on account of external debt servicing. The reserves are barely enough for two months of imports and are below the International Monetary Fund's adequacy levels.

China's forex reserves rise for 8th straight month to $3.1 trn

China's forex reserves, the highest in the world, rose for the eighth month in a row to over $3.1 trillion in September as pressure from capital outflow eased, according to official data released today.

In January, the forex reserves plunged below $3 trillion, but as the economy stands on a firmer footing and the yuan continues to stabilise, the stockpile has increased steadily since February.

It was the first time that the reserves climbed for the eighth months in a row since June 2014, bringing the total to its highest level since October 2016, state-run Xinhua news agency reported.

The world's largest currency hoard totalled $3.1085 trillion by the end of September, increasing by $16.98 billion from a month earlier, data from the People's Bank of China said.

Last month's increase followed a gain of $10.81 billion in August, the report said.

The State Administration of Foreign Exchange (SAFE) said that economic growth has remained stable and sound since the beginning of the year and the yuan has appreciated steadily, while cross-border capital flows stayed stable, which contributed to the forex reserves' gradual rebound.
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