ISLAMABAD: Pakistan has obtained another $500 million loan from Industrialand Commercial Bank of China (ICBC) considering dwindling foreign exchangereserves and rising current account deficit.

This raises ICBC contribution to $1 billion to assist a strong rupeeagainst the U.S dollar in three months, Tribune has reported.

The govt obtained the loan on January 15th at an interest rate of 4.5percent, sources in the finance ministry told. During January, Pakistanraised $704 million worth of new loans, taking total foreign borrowings to$6.6 billion in first seven months of financial year 2017-18.

These foreign loans constitute 86 percent of Pakistan’s annual budgetaryestimates which was approved by the parliament in June 2017. It hints theamount of foreign loans may cross $10 billion for a second year in a row.

China provided $1.6 billion, which made it the highest lender andconstitutes 25 percent of Pakistan’s total foreign loans amassed in lastseven months of FY 2017-18.

Also, China provided $610 million funding for project financing purposesduring July-January FY 2017-18. Sovereign bonds remained the biggest sourceof loans after Pakistan raised over $2.5 billion in November, whichconstituted 38 percent of the total contracted foreign loans.

This is the second loan ICBC has extended to Pakistan for supporting itsdeclining forex reserves, which are being used to secure a strong rupee andfinance the trade deficit.

ICBC had previously extended $500 million loan to Pakistan in October 2017.And sources in the central bank revealed it was still intervening incurrency market to ensure dollar-rupee level remained at current level.

The country’s total foreign commercial borrowings during first seven monthsof FY 2017-18 rose to $1.8 billion, sources told.

Till now, Pakistan has been loaned $255m by Credit Suisse AG, StandardChartered Bank London $200 million, Citibank $267 million and Dubai Bank$55.9 million. Foreign commercial bank loans constituted 27 percent of thecountry’s total foreign loans obtained.