China has agreed to refinance Pakistan with $ 2.3 billion worth of funds: Finance Minster

China Economic Net

Islamabad: Finance Minister Miftah Ismail has said that China had agreed to refinance Pakistan with US $ 2.3 billion worth of funds amid the dwindling foreign exchange reserves of the country.

“Good News: The terms and conditions for refinancing of RMB 15 billion deposit by Chinese banks (about US$ 2.3 billion) have been agreed. Inflow is expected shortly after some routine approvals from both sides. This will help shore up our foreign exchange reserves,” Ismail tweeted.

This development comes as the restoration of the country’s delayed International Monetary Fund (IMF) programme depends on the government’s capacity to make a fiscal adjustment of about 2.5 percent of the Gross Domestic Product (GDP).

The fiscal adjustments can be made by increasing the revenues and reducing the expenditure in the next budget.

In order to demonstrate its commitment to implement the ‘reform agenda,’ the Pakistan government must end the subsidy of petrol and diesel prices, raise electricity tariffs by Pakistani Rs 8 per unit via an increase in base tariff and fuel price adjustments and increase gas tariffs by 20 percent on average.

Miftah Ismail said that the staff-level agreement with the IMF was expected to take place in mid-June of this year. It also indicates that the agreement is expected to be made only after the announcement of the next budget, in line with the IMF programme’s objectives.

On Thursday evening, the Pakistani government announced that it had decided to raise the prices of all petroleum products barring one by another Rs 30.

After the latest round of hike, petrol will be priced at Rs 209.86 per liter, diesel at Rs 204.15, kerosene oil at Rs 181.94 and light diesel at Rs 178.31. Only kerosene oil’s price was hiked by less than Rs 30 per liter. All other products got raise of more than Rs 30 per liter.