China-Pakistan relations are constantly growing over the CPEC Project which is a part of the One Belt One Road Initiative of China. As a part of its pledge under the One Belt One Road initiative, China has again granted a huge loan to Pakistan. As reported by The Express Tribune, China, in another bid sustain Pakistan’s crumbling economy, has lent $ 1 billion to Islamabad, to stabilize the dying foreign currency reserves.
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Pakistan’s Economic Woes and Dependence on China
This huge loan speaks for the growing dependence of Pakistan on China and how it is being caught in the debt trap. The foreign currency reserves of Pakistan have plummeted to $ 9.66 billion from 16.4 billion in the month of May. In the fiscal year that ended in June, China’s lending to Islamabad reached $ 5 billion. In the first 10 months, bilateral loans of $ 1.5 billion were granted by China to Islamabad. This is as per a certain document of the Finance Ministry of Pakistan which was seen by Reuters.
In the same tenure, Pakistan was also on the receiving end of commercial bank loans worth $ 2.9 billion. This lending is a part of China’s pledge to the correct the ruined economy of Pakistan. This pledge has been made under the China Pakistan Economic Corridor (CPEC) which is one of the biggest dimensions of the One Belt One Road Initiative. China has invested $57 billion in the China Pakistan Economic Corridor.
Pakistan will have the general election on July 25. Experts believe that this loan will not be enough for the South Asian country and the new government will likely seek another bailout after the one in 2013. In 2013 Pakistan was granted a bailout package of $ 6.7 billion from the International Monetary Fund (IMF). Even the current scenario will push the new government to go to the IMF for help. Pakistan’s economy is surely headed to land in troubled waters.
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