Islamabad [Pakistan], March 31 (ANI): China is working on a request from cash-strapped Pakistan to roll over a USD 2 billion loan that matured last week, amid a stalemate in bailout talks with the International Monetary Fund (IMF), a top finance ministry official said, reported The News International.
Such a rollover is critical for Pakistan, whose foreign exchange reserves have fallen to four weeks' worth of imports at a time when it is seeking a $1.1 billion IMF bailout tranche.
"It's a work in progress," the official wrote in a text message, referring to the rollover of the Chinese loan, which was due to mature on March 23. "Formal documentation is being prepared."The source, cited by The News International, who spoke on the condition of anonymity, added that a formal announcement would be made.
China's finance ministry and central bank, the People's Bank of China, did not immediately respond to a request for comment made by The News International.
As Pakistan struggles to avoid defaulting on its obligations, the only assistance so far has come from long-time ally Beijing, in the form of a USD 1.8 billion refinancing already credited to Pakistan's central bank.
The IMF funding is critical for Pakistan to open up other external financing channels. The two have been negotiating since early February to resume USD 1.1 billion in funding held since November as part of a USD 6.5 billion bailout agreed upon in 2019.
One of the last remaining conditions for the tranche's release is securing assurances on external financing to fund Pakistan's balance of payments.
Notably, Pakistan and China have recently reviewed bilateral ties and agreed to expand and reinforce political and security cooperation, bilateral trade, economic and financial cooperation, cultural exchanges, tourism, and people-to-people ties, The News International reported.
The development comes as the third round of Pakistan-China bilateral political consultations (BPC) was held in Beijing. Pakistan's delegation was led by Foreign Secretary Asad Majeed Khan while the Chinese side was led by Vice Foreign Minister Sun Weidong, the Pakistan Foreign Office spokesperson said in a press release on Sunday, as per The News International report.
The two sides noted the completion of 10 years of the China-Pakistan Economic Corridor (CPEC) and they reaffirmed their commitment to CPEC which remained a key pillar of bilateral cooperation and a symbol of deepening friendship between the two nations, as per The News International report.
China and Pakistan agreed to remain engaged in the expansion of CPEC including on participation of third parties to enhance regional connectivity and cooperation. The two sides agreed, "Pakistan and China will also enhance high-level engagements and dialogue mechanisms and make the channels of communication even more robust."Pakistan's Foreign Secretary expressed gratitude to China for its support for the economic stability of Pakistan and humanitarian assistance during the floods in 2022. Meanwhile, Sun Weidong reaffirmed China's support for Pakistan's sovereignty and economic security, as per TheThe two sides held discussions on a range of regional and global issues of mutual interest and expressed satisfaction over their cooperation and engagement on important regional developments including in Afghanistan. The two sides agreed to further strengthen dialogue and cooperation and multilateral platforms.
Earlier this month, the Industrial and Commercial Bank of China (ICBC) approved the rollover of USD 1.3 billion in facilities. Taking to his official Twitter handle, Pakistan Finance Minister Ishaq Dar made the announcement.
Ishaq Dar tweeted, "Formalities completed [and] Chinese Bank, ICBC approved rollover of USD 1.3 billion facilities which has been repaid by Pakistan to ICBC in recent months."He further said that the facility would be disbursed in three instalments, the first one of USD 500 million has been received by the State Bank of Pakistan and added "It will increase forex reserves."As per the Geo News report, Pakistan is currently facing growing economic challenges, with high inflation, sliding forex reserves, a widening current account deficit and a depreciating currency. (ANI)