In a fresh appeal for financial lifeline, Pakistan has asked China for an additional 10 billion yuan ($1.4 billion) loan, after exhausting its existing $4.3 billion facility. The request, made public on April 27, underscores the deepening fiscal strains facing Islamabad.
Pakistan’s 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. He sought an increase in the currency swap agreement limit to 40 billion yuan, according to a statement from Pakistan’s Finance Ministry issued late on April 26.
Although Pakistan has previously requested expanded debt limits, China has declined such appeals in the past. This latest move comes just weeks after Beijing extended the $4.3 billion (30 billion yuan) facility for another three years.
The two countries had signed a currency swap agreement during Chinese Prime Minister Li Qiang’s recent visit, which extended Pakistan’s debt repayment window to 2027. Pakistan has already fully drawn down the existing $4.3 billion trade finance facility under the China-Pakistan arrangement to meet its debt obligations.
Meanwhile, Aurangzeb said he expected the IMF executive board to approve the Staff Level Agreement for a new $1.3 billion climate resilience loan program and complete the first review of the ongoing $7 billion bailout program in early May.
Approval would unlock a $1 billion disbursement under the program, which Pakistan secured in 2024 and has been critical to stabilizing its fragile economy.
The request to China comes amid rising regional tensions. Relations with India have worsened sharply following the Pahalgam terror attack in Kashmir that killed 26 tourists, intensifying diplomatic and economic pressures.
Asked about the potential fallout from the tensions with India, Aurangzeb said it was “not going to be helpful.” He noted that bilateral trade had already shrunk, totaling just $1.2 billion last year.
(With inputs from agencies)
