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Sunday June 16, 2024

Shoring up foreign reserves: Pakistan requests China for $500m loan refinancing

Pakistan has requested China to refinance a $500 million commercial loan that was paid back last week

By Our Correspondent
November 12, 2022
A representative image of forex trading. AFP
A representative image of forex trading. AFP 

ISLAMABAD: Pakistan has requested China to refinance a $500 million commercial loan that was paid back last week. 

The foreign exchange reserves depleted by $956 million. During the week ending Nov 4, the reserves decreased to $7.95 billion due to the external debt servicing. Major external debt repayments executed during the week include repayment of GOP commercial loans. Refinancing of these loans is in the process which will improve foreign exchange reserves in the coming weeks.

A top government official told The News that the government had paid back $500 million commercial loan to a Chinese bank. The commercial loans are not re-financed and are required to be paid back first for refinancing the same [amount].

“We have made a request for refinancing this $500 million loan from the Chinese commercial bank,” said the official. Meanwhile, Pakistan is all set to request the UAE authorities for a rollover of $2 billion in deposits coming due in February 2023 and offer investments in two RLNG plants and the Roosevelt Hotel.

Minister for Finance and Revenue Ishaq Dar is currently visiting Abu Dhabi and is expected to get back home on Sunday. “There are some outstanding issues hindering the sale of Roosevelt Hotel but it is made part of the list of potential investment packs opportunities. The UAE authorities have been asked to invest in the RLNG plants and look into other investment opportunities,” top official sources confirmed to The News on Friday.

They said Pakistan had made a request for the rollover of existing deposits of $2 billion, which were becoming due in February 2023. “There are some potential investment opportunities, especially in two RLNG power plants and others as well. The government is making offers to friendly countries, including the Kingdom of Saudi Arabia, Qatar, and the UAE, for making investments into RLNG power plants through G2G deals.”

Federal Minister for Finance Ishaq Dar also held a meeting with the Etisalat high-ups but there stood no chance for the release of stuck-up amount of $800 million so far. There are some procedural hindrances involved in the sale of Roosevelt Hotel that would become clearer in the coming few months.

It is pertinent to mention that the Kingdom of Saudi Arabia and China have already given assurances to Islamabad to provide $13 billion financial package in the shape of rollover of deposits, rollovers, jacking up the existing SWAP facility from 30 billion RMB to 40 billion RMB and increased oil facility on deferred payments.