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China to extend $500m loan to Pak

world Updated: Apr 18, 2008 22:56 IST

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China will offer its close ally Pakistan a low-interest $500 million loan to help ease its growing financial problems, Pakistan’s foreign minister has said.

Shah Mehmood Qureshi made the announcement on Thursday after a recent visit to China and after Pakistan hosted a protest-free, security-heavy leg of the Olympic torch relay amid Western criticism of its giant neighbour’s human rights record in Tibet.

Qureshi, who accompanied President Pervez Musharraf on the April 10-15 trip, said that it had been “highly successful”. “If we have any reliable friend, my experience says it is China,” Qureshi said at a news conference in Islamabad.

Qureshi is a loyalist of slain former Prime Minister Benazir Bhutto, whose party defeated Musharraf’s political supporters in February’s elections and now leads a new coalition government. The government has inherited an ailing economy. It faces yawning budget and balance of payments deficits driven by rising world prices for commodities such as oil.

The World Bank last month urged the new administration to take urgent action or risk a crisis, even though the economy was still growing at an annual rate of more than 6 per cent.

On Thursday, Qureshi said Pakistan faces “huge economic problems” but he hoped the government would overcome them. He said that trade between Pakistan and China was worth $6.8 billion, and that he hoped that it would reach $15 billion by 2011.

The two countries’ alliance goes back decades, and China is a leading source of investment and arms supplies for Pakistan.