From China for fast-track refinancing Pak seeks USD1.3 billion loan

ISLAMABAD: Cash-strapped Pakistan has urged its all-weather ally China to fast-track the refinancing of its $1.3 billion trade debt, citing dwindling prospects of reviving the IMF’s loan program. has been informed, a media report said on Tuesday.
According to the Express Tribune newspaper, the request was made by Finance Minister Ishaq Dar during a meeting with China’s Governor Pang Chunxue on Monday.
The finance minister raised the issue of refinancing two Chinese commercial loans worth US$1.3 billion, which will mature in the next two to three weeks, officials said.

The report quoted sources as saying that Chinese officials have already assured Pakistan that they will repay both loans, but Islamabad wants the money to be re-loaned as soon as it is repaid.
Dar urged the Chinese authorities to take timely refinancing of loans, which would increase Pakistan’s foreign exchange reserves.
In less than two weeks, Pakistan is set to pay off a US$300 million loan to the Bank of China. The cash-strapped country will also pay another US$1 billion to the China Development Bank within three weeks.

The country’s official foreign exchange reserves are US$3.9 billion, and any delay in debt refinancing could push reserves well below US$3 billion.
“The Finance Minister further updated the Charge d’Affaires on the progress in discussions with the IMF on the completion of the Ninth Review,” a Finance Ministry statement said.

Pakistan and the International Monetary Fund (IMF) have failed to reach a staff-level agreement on a much-needed US$1.1 billion bailout package aimed at saving the country from bankruptcy.
The funds are part of a US$6.5 billion bailout package approved by the IMF in 2019, which analysts say is crucial if Pakistan is to avoid defaulting on its external debt obligations.
Dar said that according to IMF officials, despite a clear reduction in the current account deficit, it is not accepting Pakistan’s request to reduce the requirement to manage US$ 6 billion in new loans.

He added that Pakistan had arranged $4 billion, but the international lender was still insisting on new loans of $6 billion.
The minister said it was hoped that the IMF would sign a staff-level agreement after arranging the USD 3 billion, but that did not happen.

“Following the agreement, the World Bank is expected to approve USD 450 million and the Asian Infrastructure Investment Bank to provide USD 250 million.”
However, the budget books showed that the government did not expect USD 3 billion to arrive before June 30 and included the inflow in the next fiscal year’s estimates.

Officials said the Chinese diplomat in Islamabad was told that despite the government’s best efforts, the IMF program would end on June 30.
Dar clarified on Saturday that there is no possibility of the 10th review being completed, even as the IMF stands by its position of combining the 9th and 10th program reviews.
Last week, he said Pakistan was considering asking bilateral creditors for debt restructuring and reiterating the risk of default.
Denying the plans, State Bank Governor Jameel Ahmed said in a background briefing that “as yet, there are no plans to restructure the loans”.
“We should give people hope that Pakistan will come out of this crisis, and there is no need to panic over the possibility of default,” Dar said while addressing a seminar on Monday, according to the report.

Pakistan’s government on Friday unveiled a budget of 14.4 trillion rupees for 2023-24 as it struggled to stem rising defaults due to dwindling foreign reserves.