ISLAMABAD: Pakistan on Monday asked China to expedite the refinancing of $1.3 billion in expiring commercial loans and informed it of the dwindling possibilities for a renewal of the International Monetary Fund (IMF) loan programme.
Finance Minister Ishaq Dar made the proposal during a meeting with China’s Charge d’affaires Pang Chunxue at the Finance Division.
According to government officials, the finance minister highlighted the problem of refinancing the two $1.3 billion Chinese commercial loans. The loans will be due in two to three weeks.
According to insiders, Chinese authorities have already guaranteed Pakistan that they will reimburse both loans, but Islamabad wants the money to be re-lent as soon as it is paid back.
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Dar is alleged to have pressed the Chinese charge d’affaires to refinance the loans on time, which would help Pakistan’s foreign exchange reserves.
Pakistan is set to repay $300 million to the Bank of China in less than two weeks and another $1 billion to the China Development Bank in three weeks.
The country’s declared foreign exchange reserves are $3.9 billion, and any delay in refinancing the loans could reduce the reserves to less than $3 billion.
“The finance minister also updated the charge d’affaires on the progress of talks with the IMF on the completion of the ninth review,” the Ministry of Finance stated in a statement.
According to the sources, Dar stated that the IMF would not accept Pakistan’s request to reduce the requirement of arranging $6 billion in new loans despite a significant reduction in the current account deficit. Pakistan has negotiated $4 billion in new loans, but the IMF was still demanding $6 billion, he said.
Dar stated at a public gathering on Monday that Saudi Arabia had promised $2 billion and the UAE had pledged $1 billion to assist Pakistan in reaching a staff-level agreement.
He stated that there was expectation that the IMF would sign the staff-level agreement after securing $3 billion, but this did not occur. “After the agreement, there is hope that the World Bank will approve $450 million and the Asian Infrastructure Investment Bank will give $250 million.”
However, budget documents show that the administration did not expect the $3 billion to arrive before June 30 and included the inflows in the estimates for the following fiscal year.
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According to officials, the top Chinese diplomat in Islamabad was informed that the government had done its best, but the IMF programme was coming to an end on June 30. The IMF maintained its position of combining the ninth and tenth programme assessments, but Dar stated on Saturday that the tenth evaluation will not be completed.
Dar also stated last week that Pakistan was considering requesting debt restructuring from bilateral creditors. However, in a background briefing, State Bank Governor Jameel Ahmad stated that “as of now, there is no plan to enter into any debt restructuring.”
Dar slammed people who were discussing Pakistan’s default once more.
“We should give people hope that Pakistan will come out of this crisis and that there is no need to panic about the possibility of default,” the minister said on Monday at a seminar hosted by the Institute of Chartered Accountants of Pakistan (ICAP).
“You being a nuclear power and missile power has not been digested by most of the world,” he remarked, referring to geopolitics. He stated unequivocally that Pakistan would manage all international payments and would not demand haircuts.
