China Refinances $1 Billion SAFE Deposit to Pakistan

Central bank reserves are expected to stay in the region of $8.7 billion this week as China has granted a one-year rollover of $1 billion in SAFE (State Administration of Foreign Exchange) deposits to Pakistan. The deposit was going to mature by the end of July, but China consented to refinance $1 billion, essentially fulfilling external financing pre-conditions set by the International Monetary Fund for securing rollovers of maturing debt, local media reported earlier today. China first granted a $1 billion rollover of SAFE deposits in 2022-23, due in the third week of this month. Additional research suggests the cash-strapped economy was slated to make a $1 billion principal payment on the Chinese deposit, including a $33 million interest payment. The principal amount has now been successfully rolled over. The rollover comes a few days after the Economic Coordination Committee of the federal cabinet in a meeting on Thursday deliberated and approved a plan to ask China to extend the deadline for repayment of Pakistan’s publicly guaranteed debt of more than $2 billion by two years. It bears mentioning that Pakistan’s total external debt stock was recorded at $100.52 billion at end-December 2022, of which $29.59 billion has been financed by China.