WASHINGTON: Pakistan has requested China to augment its existing swap line by 10 billion yuan ($1.4 billion), Finance Minister Muhammad Aurangzeb said, adding that he expects the country to launch a Panda bond before year-end, the US media reported.
Pakistan already has a 30 billion yuan swap line, Aurangzeb told Reuters in an interview on the sidelines of the International Monetary Fund and World Bank Group spring meetings in Washington. “From our perspective, getting to 40 billion renminbi would be a good place to move towards... we just put in that request,” Aurangzeb said.
China’s central bank has been promoting currency swap lines with a raft of emerging economies, including Argentina and Sri Lanka. Pakistan has also made progress on issuing its first panda bond, a debt issued on China’s domestic bond market, denominated in yuan. Talks with the presidents of the Asian Infrastructure Investment Bank (AIIB) and Asian Development Bank (ADB) -- the two lenders who are in line to provide credit enhancements for the issue — had been constructive, he said. “We want to diversify our lending base and we have made some good progress around that -- we are hoping that during this calendar year we can do an initial print,” he said.
Meanwhile, Aurangzeb expected the IMF executive board to sign off in early May on the Staff Level Agreement on its new $1.3 billion arrangement under a climate resilience loan programme as well as the first review of the ongoing $7 billion bailout programme. Getting the green light from the IMF board would trigger a $1 billion payout under the programme, which the country secured in 2024 and has played a key role in stabilising Pakistan’s economy.
Asked about the economic fallout from the tensions with India following the killing of 26 persons at a tourist site in the Indian Illegally Occupied Jammu and Kashmir (IIOJ&K), Aurangzeb said it was “not going to be helpful.” Aurangzeb estimated growth around 3 per cent in the current financial year, which ends in June 2025, and in the 4-5 per cent range next year, with a view to hitting 6 per cent thereafter. In a related development, Minister for Finance Mohammad Aurangzeb said that the multilateral and bilateral lenders conveyed a clear message to Pakistan for staying on course for undertaking structural reforms and avoiding repetition of boom and bust cycles.
Talking to reporters here at the Pakistani Embassy, the minister said that when Pakistan entered a certain stage of macroeconomic stability, the country went off track. “We went into sugar rush for the growth paradigm, we went off track. Our multilateral and bilateral partners are telling us to stay on the course,” he added.
The minister highlighted structural reforms and identified tax, energy, SOEs and privatisation, and public finance to manage the economy on a sustained and prolonged basis. “We need to go on a sustainable growth path, and the moment of boom and bust cycles resulted in the 24th IMF programme,” he said, and added that the country could not afford to squander this fantastic opportunity.
Aurangzeb said that the IMF’s programme is Pakistan’s programme, which was supported, assisted and funded by the IMF. Pakistan, he said, needs to increase the tax-to-GDP ratio up to 10.6 percent and could touch 13.5 percent, requirements to fix the energy sector, and bring SOEs on track. There is a need to cherish and praise the donors for extending support for this journey.
Meanwhile, Finance Minister Mohammad Aurangzeb virtually chaired the maiden session of the PM’s Committee on Performance Management System (PMS) to replicate the FBR’s devised system of evaluating the performance of officers in all other federal ministries/divisions.
It was an initial meeting and the Minister for Finance will chair more meetings after his return from the US.