ISLAMABAD, March 3 (Reuters) – Industrial & Commercial Bank of China (ICBC) on Friday(March-03) approved a rollover of a $1.3 bn loan for cash-strapped Pak, which will help shore up its depleting foreign exchange reserves, Finance Minister(FM) Ishaq Dar said.

The facility will be disbursed in 3 instalments. The first one of $500 mn has been received by Pakistan’s central bank, Ishaq said in a tweet. “It will increase forex reserves,” he said.

Formalities completed & Chinese Bank, ICBC(Industrial & Commercial Bank of China) approved rollover of US$1.3 bn facility which has been repaid by Pakistan to ICBC in recent months. Facility will be disbursed in 3 instalments, first one of US$500 mn has been received by SBP(State Bank of Pakistan). It will increase forex reserves!

The money, which Ishaq Dar said has been repaid by Pak to the ICBC in recent months, is crucial for the South Asian economy, which is facing a balance of payment crisis, with its central bank foreign exchange reserves dropping to levels barely able to cover 3 weeks of imports.

Pak has already received a $700 mn loan from China to help boost its forex reserves.

Ishaq Dar said the total $2 bn is in effect Pakistan borrowing back the debt repayments it has paid to Beijing for previously agreed loans.

Mr Dar said Pakistan will need $5 bn external financing to close its financing gap this fiscal year, which ends in June.

More external financing will be coming to Pak only after Islamabad signs a deal with the IMF, which the minister said should be done by next week.

The lender has been negotiating the deal with Pakistan since early last month to clear its ninth review, which if approved by its board will issue over $1 bn tranche of $6.5 bn bailout agreed in 2019.

“We will, God willing, take this country out of this quagmire,” Mr Dar said, dismissing concerns of a default risk.