Pakistan Seeks Additional $1.4 Billion Aid from China Amid Fiscal Strains

Pakistan has requested an additional loan of 10 billion yuan from China to address financing issues. The appeal, made by Finance Minister Muhammad Aurangzeb, seeks to increase the Currency Swap Agreement limit. This move follows a recent extension of the current facility and reflects ongoing financial pressures faced by Pakistan.

In a significant move to counter persistent external financing dilemmas, Pakistan has formally approached China for an additional loan of 10 billion yuan, equivalent to approximately USD 1.4 billion. This announcement on Saturday, reported by the Express Tribune, highlights the fiscal strains Pakistan is experiencing.

Finance Minister Muhammad Aurangzeb made this appeal to China's Vice Minister of Finance, Liao Min, aiming to elevate the Currency Swap Agreement limit to CNY 40 billion. Pakistan has already exhausted the existing CNY 30 billion (USD 4.3 billion) trade facility for debt repayment and seeks to raise this by another CNY 10 billion, about USD 1.4 billion per current exchange rates. This request was made during the IMF and World Bank annual meetings. An approval could increase the overall facility to approximately USD 5.7 billion.

This is not Pakistan's first attempt to seek higher debt limits from China, though similar requests have been previously declined. The current appeal comes shortly after China's three-year extension of the existing USD 4.3 billion facility, sanctioned during Chinese Premier Li Qiang's visit, extending repayment to 2027. Additionally, Pakistan secured a USD 600 million commercial loan, raising concerns that the IMF later clarified were not tied to their bailout package. Amid ongoing financial challenges, Pakistan continues to rely heavily on its strategic partnership with China for economic support and development, as emphasized by both finance ministers.

(With inputs from agencies.)