Pakistan requests $1.4bn loan from China

To address its ongoing funding issues, Pakistan has officially requested a supplemental loan of 10 billion yuan (CNY), approximately $1.4 billion, from China.

During a meeting with China’s Vice Minister of Finance, Liao Min, Pakistan’s Finance Minister Muhammad Aurangzeb requested an increase in the Currency Swap Agreement limit to CNY 40 billion (around $5.7 billion).

Pakistan has fully utilized its existing CNY 30 billion (USD 4.3 billion) trade facility for debt repayment and now seeks an additional CNY 10 billion (approximately $1.4 billion).

This request came during the International Monetary Fund (IMF) and World Bank annual meetings.

Although Pakistan has previously sought increases in its debt limit, Beijing declined those requests.

Notably, this appeal follows China’s recent extension of the existing facility for another three years, which also extended Pakistan’s debt repayment period to 2027.

In addition to this request, Pakistan accepted terms for a costly $600 million commercial loan at an 11% interest rate for IMF program purposes, which raised concerns.

Pakistan has used Chinese trade finance to repay debts and stabilize foreign reserves, but these reserves remain insufficient to meet obligations.

Aurangzeb thanked China for its support and expressed interest in enhancing bilateral cooperation.