Pakistan to Seek $600 Million Loan From China For Upcoming Fiscal Year

Prime Minister Shehbaz Sharif and Finance Minister Muhammad Aurangzeb will meet with the Industrial and Commercial Bank of China (ICBC) and the Bank of China to authorize a $600 million loan for the cash-strapped country, high-level sources told ProPakistani. Given that past efforts to obtain this loan amount have been unsuccessful, sources said discussions this time will focus on convincing the Chinese banks to relax their stringent loan disbursement conditions. Notably, the stringent requirements include a high interest rate of up to 8 percent and a condition linking the loan to the payment schedule of Chinese Independent Power Producers (IPPs), sources added. Since July 2023, the federal government has been in back-to-back discussions to secure this loan. Efforts are still underway to ensure that the $600 million loan is secured for the next financial year, sources added. In November 2023, ProPakistani first reported that authorities at the time were seeking $600 million in new loans, $300 million each from two Chinese banks. It bears mentioning that China has provided $21.2 billion in loans to Pakistan since 2000, accounting for 30 percent of overall funding. These loans were made to avoid default and to boost the country’s stagnating forex reserves.