ISLAMABAD: The federal government has decided to obtain $5 billion in loans from China, Russia and Kazakhstan to improve dwindling foreign exchange reserves.
The government plans to borrow $3 billion from China and $1 billion each from Russia and Kazakhstan.
According to media reports, the finance ministry has prepared a plan for signing loan agreement with China during Prime Minister Imran Khan’s visit to Beijing next week.
Prime Minister will visit the Chinese capital on February 3 to attend the opening of the Beijing Winter Olympics. PM Khan will also meet the top Chinese leadership on the sidelines for bilateral talks.
The federal government is considering requesting China to approve another $3 billion loan to China’s State Administration of Foreign Exchange, known as SAFE deposits.
The Economic Affairs Division, nonetheless, contradicted the news item that it has prepared a plan to borrow $5 billion from China, Russia and Kazakhstan. Media reports have mentioned in the name of the Finance Ministry and till the filing of this report the ministry did not clarify the situation.
Meanwhile, China has already placed around $11 billion with Pakistan in the shape of commercial loans and foreign exchange reserves support initiatives, including $4 billion in SAFE deposits.
The Chinese money is part of the country’s current official foreign exchange reserves recorded at $16.1 billion. In 2020-21, Pakistan had paid more than 26 billion rupees in interest cost to China for using $4.5 billion in Chinese trade finance facility to repay maturing debts.
The government will also seek Chinese investment in six priority areas by highlighting the country’s competitive advantages in areas such as cheap but skilled labour, access to the world’s two wealthiest continents and tax exemptions.
