Pakistan asks China for $2b debt rollover

ISLAMABAD:

Caretaker Prime Minister Anwaarul Haq Kakar, in a letter, has requested his Chinese counterpart Li Qiang to roll over a debt of $2 billion for a year.

Finance ministry sources said China was expected to extend the loan payment period soon.

The deposit time for the $2 billion loan from China will complete on March 23.

There have been contacts between officials of the finance ministry and the Chinese authorities to roll over the debt of $2 billion.

In his letter, Kakar expressed gratitude to China for its financial assistance to Pakistan during its economic crisis.

Pakistan has secured a safe deposit of a total of $4 billion loan from China, reducing the country’s mounting pressure on external debt payments and stabilising its foreign exchange reserves.

Earlier this month, the UAE rolled over Pakistan’s maturing loan of $2 billion.

Apart from the UAE, Saudi Arabia has deposited $5 billion with the State Bank of Pakistan.

Following the loan rollover by the UAE, the interim government requested the International Monetary Fund (IMF) to dispatch a new mission this month for talks for the last loan tranche of $1.2 billion.

The IMF’s next mission is critical for not only securing the last loan tranche but also for beginning negotiations for a new long-term programme.

While speaking to a private TV news channel recently, former finance minister Ishaq Dar said in case his party – the PML-N – won the elections and formed the government, the decision about the new IMF programme would be made at the earliest.

Dar, the four-time finance minister of the country, added that in case his party decided not to enter the IMF programme, it would immediately start implementing the belt-tightening measures.

The IMF has made new adjustments in its fresh staff-level report about the available financing to Pakistan.

The Washington-based lender has increased the projection of budget support loans to $3 billion but cut the project financing to $3.7 billion for this fiscal year.

The overall external financing requirements have been reduced to little under $25 billion with minor downward adjustments in the current account deficit projections, the report showed.

The report suggested that the global lender had made a minor adjustment of $575 million in its current account deficit projection in comparison with July’s estimates.

The IMF has now projected the deficit at $5.7 billion or 1.6% of the GDP – an estimate that appeared on the higher end.