China has granted Pakistan a significant financial boost by agreeing to a one-year rollover of $1 billion in SAFE (State Administration of Foreign Exchange) deposits. This move comes as a timely relief for Pakistan’s cash-strapped economy and ensures the country meets external financing pre-conditions set by the International Monetary Fund (IMF).
China’s Timely Rollover of SAFE Deposit
Amidst economic challenges, China extends the maturity of a $1 billion deposit, securing Pakistan’s financial stability.
The deposit, which was initially set to mature by the end of July, has been extended for a year, thanks to China’s consent. This rollover plays a crucial role in fulfilling external financing requirements as mandated by the IMF, alleviating pressure on Pakistan’s financial standing.
Relief for Pakistan’s Cash-Strapped Economy
China’s assistance in rolling over the SAFE deposit brings much-needed relief to Pakistan’s struggling economy.
With Pakistan’s cash reserves expected to remain around $8.7 billion, the one-year extension of the $1 billion deposit helps the country avoid default on maturing debts. This move comes at a critical juncture when Pakistan is facing economic challenges, enabling the nation to address its financial obligations effectively.
Pakistan-China Financial Collaboration
China’s continued support bolsters Pakistan’s foreign reserves and eases the burden of debt repayment.
Having already financed a significant portion of Pakistan’s external debt, amounting to $29.59 billion out of the total $100.52 billion recorded at the end of December 2022, China’s rollover further strengthens the bilateral financial collaboration between the two nations.
