KARACHI: China is working on a request from cash-strapped Pakistan to roll over a $2 billion loan that matured last week, a top finance ministry official said, amid a stalemate in bailout talks with the International Monetary Fund (IMF).
Such a rollover is critical for Pakistan, where foreign exchange reserves have dipped to just four weeks’ worth of imports, at a time when it is seeking an IMF bailout tranche of $1.1 billion.
“It is a work in progress,” the official said in a text message, referring to the rollover of the Chinese loan, which matured on March 23. “Formal documentation is underway.”
A formal announcement will be made, added the source, who spoke on condition of anonymity, without giving further details.
China’s finance ministry and its central bank, the People’s Bank of China, did not respond immediately to a request for comment on the matter.
As Pakistan struggles to avoid defaulting on its obligations, the only help so far has come from longtime ally Beijing, through a refinancing of $1.8 billion already credited to Pakistan’s central bank.
The IMF funding is critical for Pakistan to unlock other external financing avenues, and the two have been negotiating since early February to resume $1.1 billion in funding held since November, part of a $6.5 billion bailout agreed in 2019.
One of the lender’s last remaining conditions for release of the tranche is securing an assurance on external financing to fund Pakistan’s balance of payments.