ISLAMABAD: In response to persistent external financing pressures, Pakistan has formally requested a 10 billion yuan ($1.4 billion) loan from China, following an extension of the existing $4.3 billion facility for three more years.
Finance Minister Muhammad Aurangzeb made the request during a meeting with China’s Vice Minister of Finance, Liao Min, proposing to increase the Currency Swap Agreement (CSA) limit to 40 billion yuan. Currently, Pakistan has fully utilized the 30 billion yuan ($4.3 billion) trade facility under the China-Pakistan CSA to meet debt repayment needs and stabilize reserves. This latest request would expand the total facility to roughly $5.7 billion.
The proposal was raised on the sidelines of the IMF and World Bank annual meetings. Despite previous similar requests being declined by China, this appeal underscores Pakistan’s need to secure financing amidst uncertainty over other pipeline loans.
Additionally, Pakistan recently accepted a costly $600 million commercial loan at an 11% interest rate, independent of the IMF’s $7 billion program requirements. Aurangzeb expressed appreciation for China’s ongoing support in socio-economic development and securing IMF assistance. He also discussed Pakistan’s plans to issue its first Panda bond in the Chinese market, seeking to diversify financing options and enhance bilateral trade. Both ministers reaffirmed their strategic cooperative partnership and discussed potential for integrating the two nations’ payment systems.
Story by Shahbaz Rana
