Pakistan Officially Asks for Additional ¥10 Billion Loan From China

Pakistan has requested another loan of CN¥ 10 billion ($1.4 billion) from China to ease its external financing needs. Finance Minister Muhammad Aurangzeb made this appeal to China’s Vice Minister of Finance Liao Min at the IMF/WB annual meetings in Washington. He sought to increase the existing Currency Swap Agreement (CSA) to ¥40 billion. Pakistan has already utilized the current ¥30 billion ($4.3 billion) facility to meet debt obligations and now seeks this expanded limit to strengthen reserves. If approved, the facility would rise to approximately $5.7 billion. However, Beijing has previously declined similar requests. The CSA was first signed in 2011 between the State Bank of Pakistan and the People’s Bank of China and aims to support trade, investment, and liquidity needs between the two countries. Originally capped at ¥20 billion, it expanded to ¥30 billion in 2021 and has only been used to support Pakistan’s foreign reserves. Aurangzeb expressed gratitude for China’s support, especially in securing IMF aid, and noted Pakistan’s interest in learning from China’s economic reforms. He also shared plans to issue an inaugural Panda bond and reiterated security assurances for Chinese workers in Pakistan.