Ministry of Finance (MoF) has sought an update from Pakistan Ambassador to China Moin ul Haq on Islamabad’s request for a $21 billion financial package from China required for external account stability and budgetary needs, well-informed sources told Business Recorder.

Pakistan requested China for financial support of about $ 21 billion through rollover of existing loans of $ 10.735 billion and $ 10 billion as deposit funds, to meet future financial needs and deal with financial challenges.

On February 18, 2022, Finance Ministry wrote a letter to Pakistan’s envoy to China, saying that several agenda items came under discussion during the Prime Minister’s visit to China on February 3-6, 2022, including those submitted by the Ministry of Finance that included rollover of all financing facilities (SAFE deposits of $4.0 billion and commercial loans of $6.735 billion) upon maturity - one SAFE deposit of $2.0 billion maturing on March 23, 2022.

A rollover request has already been made, duly signed by the Prime Minister in January 2022. Likewise, a 3-year commercial loan of RMB 15 billion equivalent to $2.235 billion from a consortium of CDB, BOC, and ICBC is maturing on March 25, 2022.

Ministry of Finance claims that it has been in contact with CDB for its refinancing, and a formal request on January 27, 2022, has also been sent. Other deposits and commercial loans will be maturing at later dates.

Pakistan has also requested for provision of a deposit fund of $10 billion. In addition, the State Bank of Pakistan has proposed enhancement of currency swap arrangement to $15 billion.

Govt seeks $21bn support from China

International Monetary Fund (IMF) had allocated additional SDRs to its member countries in August 2021 with the aim of assisting them to fight the pandemic. China’s share in the allocation came to SDR 29.22 billion. Ministry of Finance has requested Chinese concurrence for the use of a portion of its share either bilaterally or through a mechanism put in place by the IMF.

Any initial response on the proposals may also be shared with the Finance Division,” the sources quoted Finance Ministry as saying in its new communication of March 15, 2022 with Pakistan’s envoy to China.

Finance Ministry has also reiterated its availability to respond to any query, to provide any additional information or to attend any meetings with the Chinese side for taking the proposals forward.

In the follow-up meeting presided over by Prime Minister Imran Khan on February 11, 2022, Governor SBP requested assistance of the Ministry of Foreign Affairs for arranging a meeting between the Governors of the Central Banks of the two countries to discuss the submitted proposals.

On March 1, 2022, Finance Ministry had directed Pakistan’s Ambassador to China to extend assistance for arranging a meeting between Governors of Central Banks of the two countries to discuss proposals.