Finance Minister Shaukat Tarin has said that China has agreed to rollover $4.2 billion debt, providing a major financial relief to the government, a news outlet reported on Wednesday.
According to the report, the minister confirmed that the $2 billion loan by China’s State Administration of Foreign Exchange (SAFE) has been rolled over and said that the visiting Chinese foreign minister has also conveyed China’s willingness to rollover another $2.2 billion Chinese commercial loan.
The report said Pakistan had made repeated requests to Beijing to rollover the debt and the latest request was made last week to Chinese top leadership.
It further said Beijing had given a commitment to the International Monetary Fund in 2019 to rollover it’s debt until the Fund programme expires.
During the visit of Prime Minister Imran Khan, Pakistan had sought $4 billion rollover of SAFE deposits loans and requested a total $21 billion lifeline that included a total $10.7 billion rollover of both commercial and safe deposits.
Pakistan had also requested to increase the size of the currency swap facility from $4.5 billion to $10 billion – an additional borrowing of $5.5 billion.
China has not yet communicated its decision to Pakistan.
The Currency Swap Agreement is a Chinese trade finance facility that Pakistan has been using since 2011 to repay foreign debt and keep its gross foreign currency reserves at comfortable levels instead for trade-related purposes.
The benefit of this arrangement is that the additional Chinese loan will not reflect on the book of the federal government and will not be treated as part of Pakistan’s external public debt.
The report further said that Pakistan has only $15.8 billion foreign exchange reserves as of last week and its currency is fast depreciating. The rupee fell to the lowest ever level of Rs181.75 to a dollar in interbank on Tuesday.
