Finance Minister Optimistic on Getting Big Energy Debt Relief from China

Finance Minister Muhammad Aurangzeb said Pakistan’s request to extend energy sector debt payments has been met with an encouraging response from China, reported Bloomberg. When approved, the extension will provide financial relief as the country grapples with high electricity costs, which have tripled for some consumers in recent years. Speaking on the sidelines of the International Monetary Fund and World Bank meetings in Washington, the Finance Minister said discussions with Chinese officials are still in the early stages but the aim is to lengthen the repayment period for loans related to power plants, allowing the government to reduce electricity prices. The finance minister once again emphasized the need to raise Pakistan’s tax-to-GDP ratio to 13.5 percent, with new tax measures targeting sectors like retail and agriculture expected to take effect soon. The extension of debt maturities is part of the federal government’s plan to manage its economic challenges, including rising inflation and interest rates. The central bank has already cut its benchmark interest rate to 17.5 percent, with another reduction likely at the next meeting on November 4.