Pakistan has asked China to roll over its existing $10.735 billion debt and give it an extra $10 billion as a deposit fund, bringing the total debt to $20.74 billion.
During Prime Minister Imran Khan’s recent visit to China, the two countries discussed a number of issues, including turning over all finance facilities (safe deposits worth $4.0 billion and commercial loans of $6.735 billion) upon maturity, as requested by the Ministry of Finance.
It’s worth noting that a $2.0 billion safe deposit will mature on March 23, 2022. A request for rollover has already been submitted, which was officially signed by the Prime Minister in January 2022. On March 25, 2022, a three-year commercial loan worth RMB15 billion, or $2.235 billion, from a consortium of China Development Bank (CDB), Bank of China Limited (BOC), and Industrial and Commercial Bank of China (ICBC) will mature. For its refinancing, the Ministry of Finance has contacted CDB. On January 27, 2022, an official letter was sent. The maturities of other deposits and commercial loans will be postponed.
Pakistan has also made a particular request for a $10 billion deposit fund. Furthermore, the State Bank of Pakistan (SBP) has recommended a $15 billion increase in the currency exchange agreement.
Pakistan has also asked China to assist in the support of the IMF Board of Governors and its financing. In August 2021, the International Monetary Fund (IMF) issued more Special Drawing Rights (SDRs) to its member countries in order to assist them in combating the pandemic. China received SDR 29.22 billion as part of the allocation. The Ministry of Finance has asked China’s permission to spend a portion of its contribution, either bilaterally or through an IMF-created mechanism.
Power Purchase Agreements (PPAs) with non-CPEC-IPPs have been rearranged by the Ministry of Energy. The price of power from such IPPs has been significantly reduced as a result of this renegotiation.
The same reorganisation with CPEC-IPPs is expected to save $14.29 billion in total electricity costs throughout the project’s lifetime. According to reports, the Chinese government will compensate for the $14.29 billion in any way possible. The SBP has advised organising seminars in China to lure Chinese investors and entrepreneurs interested in setting up digital banks in Pakistan, according to sources.
The SBP has recommended a dialogue between the People’s Bank of China and the SBP on the Central Bank Digital Currency (CBDC) to enable Pakistan better assess the risks associated with CBDCs. The Governor of the SBP asked the Ministry of Foreign Affairs’ assistance in arranging a meeting between the Governors of the two nations’ central banks to consider the submitted ideas at a meeting chaired by the Prime Minister on February 11, 2022.
According to the sources, the Ministry of Finance has asked Pakistan Ambassador to China Moin ul Haque to meet with the relevant Chinese authorities to discuss the three ideas.
Meanwhile, a Chinese ministerial delegation will visit Pakistan on the 22nd and 23rd of March 2022, in conjunction with the OIC Council of Foreign Ministers’ 48th meeting. The Chinese delegation will also meet with their Pakistani counterparts in a number of bilateral meetings.