Pakistan has secured commitments from China, Saudi Arabia and the United Arab Emirates to roll over debt for a year, in a bid to secure a crucial $7 billion International Monetary Fund bailout package, Bloomberg reported on Tuesday.
The New York based news outlet stated that Finance Minister Muhammad Aurangzeb told reporters in Islamabad after a parliamentary committee meeting that the volume of rollovers would be the same as last year.
Pakistan has $12 billion in bilateral loans that have been extended for the past few years, he said.
Last month, the finance minister said that Pakistan has initiated a major effort to restructure its debt obligations with key allies, China, Saudi Arabia, and the UAE.
In his first press conference after the Beijing visit on July 28, he stated that Islamabad has requested above mentioned friendly nations to extend the maturity period of over $12 billion in annual debt by three to five years, aiming to secure IMF board approval for the 37-month bailout by next month. The government aimed to re-profiling a total of $27 billion in debt.
Pakistan and the International Monetary Fund reached an agreement for a loan programme in July. It would be the country’s 24th “longer and bigger” loan programme.
Aurangzeb said the government expected to manage a financing gap of as much as $5 billion during the fund’s three-year programme.
In its statement following the staff-level agreement with Islamabad, the IMF said the new Extended Fund Facility programme was subject to approval from its executive board and obtaining “timely confirmation of necessary financing assurances from Pakistan’s development and bilateral partners”.
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Earlier this week, Prime Minister Shehbaz Sharif told a group of journalists that he has formally requested China to reschedule Pakistan’s debt for a period of five years. He hoped that the neighbouring country would positively respond to the request.
The premier had also mentioned this during a cabinet meeting, saying that he had written a letter to the Chinese government seeking debt reprofiling for Pakistan. PM Shehbaz added that Chinese President Xi Jinping had shown “keen interest in his idea” of using local coal to cut down imports.
