Pakistan seeks additional $1.4 billion loan from China amid deepening financial crisis

Pakistan has requested an additional loan of 10 billion yuan (USD 1.4 billion) from China, as the cash-strapped nation has already exhausted the existing 30 billion yuan (USD 4.3 billion) trade facility, according to a media report on Sunday.

Finance Minister Muhammad Aurangzeb made the request to China’s Vice Minister of Finance, Liao Min, during the IMF and World Bank annual meetings in Washington, seeking to increase the currency swap agreement limit to 40 billion yuan, according to a statement from Pakistan’s Finance Ministry issued late on Saturday.

If approved, the total facility would reach around USD 5.7 billion, as reported by The Express Tribune. Although Pakistan has previously sought increased debt limits, China has declined those requests in the past. This latest appeal follows China’s recent extension of the USD 4.3 billion (30 billion yuan) facility for another three years, less than two weeks ago.

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Pakistan and China had signed a currency swap agreement during Chinese Prime Minister Li Qiang’s recent visit, extending Pakistan’s debt repayment period to 2027.

Pakistan has already fully consumed the existing USD 4.3 billion, or 30 billion yuan, trade finance facility under the China-Pakistan currency swap arrangement to repay its debts.

Earlier this month, Chinese Premier Li Qiang, who arrived in Pakistan on a four-day visit, called on Pakistan President Asif Ali Zardari and the two leaders reaffirmed their commitment to further deepen strategic cooperation in different areas, including economy, investment and regional connectivity.

The two leaders also emphasised the need to expedite the implementation of China-Pakistan Economic Corridor (CPEC) projects, state-run Radio Pakistan reported.

Li’s visit to Pakistan was said to be the first by a Chinese premier in 11 years, with the last one by Li Keqiang in May 2013.

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With inputs from agencies.