Pakistan secured a $2.3 billion loan from China on Wednesday with renewed terms and conditions that look to assist the South Asian country in fighting its economic emergency.
"The Chinese consortium of banks has today signed the RMB 15 billion (~$2.3 billion) loan facility agreement after it was signed by the Pakistani side yesterday. Inflow is expected within a couple of days," Miftah Ismail, the country's finance minister, announced on Twitter.
So far, China has extended loans of up to $16.8 billion to Pakistan, making it the largest bilateral creditor of the country.
"We thank the Chinese government for facilitating this transaction," Ismail added.
The minister hoped that the loan will shore up foreign exchange reserves which have plummeted to $8.9 billion, forcing the government to take several measures, including a ban on luxury items imports.
The Sharif government has claimed that the new loan agreement is provided at more affordable interest rates compared to a deal negotiated by his predecessor Imran Khan and later withdrawn by China in March for unknown reasons.
The finance minister had said on 2 June that Chinese banks would charge 1.5 percent plus Shanghai Interbank Offered Rate (Shibor) instead of the earlier 2.5 percent plus Shibor.
The Chinese loan has been announced amid ongoing negotiations between Pakistan and the International Monetary Fund, which has failed to release the second tranche of the $6 billion deal signed in 2019 due to non-adherence to terms and conditions set by the multilateral institution.
The IMF had asked Pakistan to address its elevated fiscal and current account deficits before releasing over $900 million under its $6 billion, 39-month program.