Pakistan is about to get new Chinese loan of $1-2 billion dollars which will make it total of $5 billion loan in fiscal year ending in June.
It indicates that Pakistan is increasing its reliance on China to tackle balance of payments issues after USA has cut down its aid to the country. However, Pakistani and Chinese officials has still said nothing about the deal.
Despite of record economic growth in last 13 years as declared by government, the current situation of foreign currency reserves and balance of payment crisis is not different than 2013.
The new Chinese loan will have temporary effect on economy as Pakistan’s efforts to resolve current account deficit by taking $2.9 billion loan from China till March, $1 billion in April and devaluing the currency are still unable to stop drowning of reserves. Exports are now increasing but still not enough to cover $10 dollar current account deficit.