ISLAMABAD: Pakistan’s Finance Minister, Muhammad Aurangzeb, on Wednesday requested China to roll over the country’s guaranteed debt and increase the current $4.3 billion currency swap agreement.
This move is aimed at bolstering Pakistan’s foreign exchange reserves, which have been under strain.
The discussions took place with Chinese Finance Minister Lan Fo’an on the sidelines of the International Monetary Fund’s (IMF) spring meetings.
The meeting was described as “positive and constructive” by officials.
During the talks, Aurangzeb thanked China for its continued support of Pakistan’s socio-economic development and its backing of Pakistan’s economic reform agenda under the IMF’s Extended Fund Facility (EFF).
The finance minister also invited both the Chinese and Saudi finance ministers to visit Pakistan.
Pakistan’s government is seeking to reschedule debt owed to the Chinese Exim Bank, which is set to mature by 2027.
Additionally, Pakistan hopes to increase the size of the bilateral currency swap agreement.
China Response Awaited
Although similar requests were made last year, formal approval has not yet been received from China.
Last October, Pakistan sought to raise the currency swap limit by an additional CNY 10 billion (about $1.4 billion), which would increase the facility to approximately $5.7 billion.
Pakistan’s foreign exchange reserves are currently around $10.6 billion, and the country aims to raise this amount to over $14 billion within the next two months by securing new loans and boosting remittances.
The rescheduling of the Exim Bank debt is expected to help address the external financing gap identified during the IMF programme.
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Furthermore, Aurangzeb discussed the status of Pakistan’s Panda Bond issuance, requesting support from the People’s Bank of China to expedite the process.
He also provided updates on key reforms, including in taxation, energy, privatization, and state-owned enterprises (SOEs).
In a related development, the Finance Ministry released its monthly economic outlook, indicating a potential gradual recovery in large-scale manufacturing despite recent declines.
Inflation is projected to remain low but could rise slightly in the coming months.
The ministry also highlighted the strong growth in exports and remittances, with last month’s remittances reaching a record high of $4.1 billion.
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Additionally, in a meeting with Saudi Finance Minister Mohammed Aljadaan, Aurangzeb thanked Saudi Arabia for its ongoing support and noted that Saudi Arabia had agreed to roll over a $5 billion cash deposit for another year. By AHmed Mukhtar.
