ISLAMABAD, April 17 (Reuters) - China has agreed to provide $500 million in concessional loan to help Pakistan meet its balance of payment needs, Pakistani foreign minister Shah Mehmood Qureshi said on Thursday.
The agreement on Chinese financial assistance came during a recent visit by Pakistan’s President Pervez Musharraf to the long-time political ally China.
The two sides also discussed various projects in areas of trade, power and energy to bolster bilateral ties, the minister said.
Qureshi, who accompanied Musharraf in the five-day tour ended on April 15, said China has expressed its willingness to help Pakistan in its balance of payment problems.
“They (China) have agreed to deposit $500 million immediately into central bank of Pakistan,” he told reporters at a news conference.
Pakistan’s two-week-old coalition, which was sworn in little over two weeks ago, is faced with a host of economic problems it blames on the previous government including rising inflation and widening fiscal, trade and budget deficits.
Finance Minister Ishaq Dar last week said Pakistan’s fiscal deficit had risen to 4.7 percent of the gross domestic product (GDP) in the first eight months of the 2007/08 fiscal year to February against the full-year target of 4.5 percent.
Similarly, the current account deficit for the first eight months to February was 5.3 percent of GDP, compared with an initial full-year target of 4.8 percent. The central bank has forecast the deficit to increase to 6.0 percent of the GDP.
Reporting by Augustine Anthony; editing by Zeeshan Haider