Prime Minister Shehbaz Sharif announced on Friday that he had written to the Chinese government, seeking debt reprofiling for Pakistan to help secure the International Monetary Fund’s approval for a $7 billion economic bailout by next month.
Pakistan has sought the reprofiling of over $27 billion in debt and liabilities with friendly nations—China, Saudi Arabia, and the UAE—to secure a 37-month IMF bailout package and ease energy sector foreign exchange outflows and consumer tariffs.
In addition, Islamabad has requested Beijing to convert imported coal-based projects to local coal and reprofile more than $15 billion in energy sector liabilities to create fiscal space amid difficulties in timely repayments.
“I have written a letter to China, it’s a matter of public domain now, for [debt] reprofiling,” PM Shehbaz said while addressing a federal cabinet meeting before the National Assembly session today.
Debt reprofiling, as defined by the World Bank, refers to modifications of the aggregate schedule of future country repayments through refinancing, debt substitution, or renegotiations. This process can help a country facing simultaneous maturity of multiple loans or experiencing exposure issues, such as in the currency composition of its liabilities. It can also mitigate currency risk, which frequently exacerbates debt sustainability issues.
PM Shehbaz informed cabinet members that Chinese President Xi Jinping had shown “keen interest in his idea” of using local coal to reduce imports. “I told the president that Thar coal could help the country cut down on imports and save $1 billion in foreign exchange,” he said.
He also noted that Finance Minister Muhammad Aurangzeb had “very good meetings” in China during his recent visit, with efforts underway to implement structural reforms for reducing circular debt. “Whether consumers are industrial or household, the government of Pakistan is fully struggling day and night to extend relief,” he said. “This is the joint voice of all parties and the nation.”
The PM commended the friendly ties with China, crediting PML-N Supremo Nawaz Sharif’s government for signing the agreements for the infrastructure. “Nobody was ready to invest in our energy sector at the time, but China stepped in and began CPEC, it was the only country to intervene,” he said.
Medium-term measures for the government include addressing loans and capacity charges.
Pakistan to Exempt Chinese Citizens from Visa Fee from August 14
According to state-owned Radio Pakistan, PM Shehbaz Sharif, while talking to a high-level Chinese delegation, informed them of the federal cabinet’s decision to exempt Chinese citizens from visa fees effective August 14. The premier also highlighted that joint ventures between the two countries in the fields of mines and minerals, information technology, export zones, industrial zones, and relocation of industry from China will further strengthen the local economy.
