A top finance ministry official said China is considering Pakistan’s request to roll over a $2-billion loan that matured last week. Pakistan urgently needs the rollover as its foreign exchange reserves have fallen to the equivalent of just four weeks’ worth of imports.
Meanwhile, Pakistan is also in discussions with the International Monetary Fund (IMF) for a bailout tranche of $1.1 billion, but the talks have reached an impasse.
“It is a work in progress,” the official said in a text message on Wednesday, referring to the rollover of the Chinese loan, which matured on March 23. “Formal documentation is underway.”
The source, who preferred to remain anonymous, stated that a formal declaration would be issued, but provided no additional information.
Neither China’s finance ministry nor its central bank, the People’s Bank of China, responded to a Reuters inquiry about the issue.
As Pakistan faces the possibility of defaulting on its obligations, its only source of assistance has come from its long-time ally, Beijing.
China has already refinanced $1.8 billion in loans to Pakistan’s central bank.
Pakistan’s ability to secure other sources of external financing hinges on the resumption of the $1.1 billion in funding from the IMF, which has been on hold since November.
Negotiations between Pakistan and the IMF began in early February to resume funding as part of a $6.5 billion bailout agreement reached in 2019.
However, one of the IMF’s remaining conditions for the release of the tranche is obtaining an assurance of external financing to support Pakistan’s balance of payments.
(With inputs from Reuters)
