Pakistan on Monday requested China to fast-track the refinancing of maturing commercial loans of $1.3 billion and apprised it of the diminishing prospects of revival of the International Monetary Fund (IMF) loan programme.

The request was made by Finance Minister Ishaq Dar during a meeting with China’s Charge d’affaires Pang Chunxue at the Finance Division.

Government officials said that the finance minister raised the issue of refinancing the two Chinese commercial loans amounting to $1.3 billion. The loans are maturing in the next two to three weeks.

Chinese authorities have already assured Pakistan that they will refund both the loans but Islamabad wants the money to be re-lent as soon as it is paid back, according to sources.

Dar is said to have urged the Chinese charge d’affaires about timely refinancing the loans, which will prop up Pakistan’s foreign exchange reserves.

Pakistan is scheduled to make a debt repayment of $300 million to the Bank of China in less than two weeks and repay another $1 billion to China Development Bank within three weeks.

The country’s official foreign exchange reserves stand at $3.9 billion and any delay in refinancing the loans could pull the reserves much below $3 billion.

“The finance minister further updated the charge d’affaires about progress on talks with the IMF on completion of the ninth review,” said a statement issued by the Ministry of Finance.

Dar said that the IMF was not accepting Pakistan’s request to lower the requirement of arranging $6 billion in new loans despite a marked reduction in the current account deficit, according to the officials. Pakistan had arranged $4 billion but the IMF was still insisting on $6 billion in fresh loans, he added.

At a public gathering on Monday, Dar pointed out that Saudi Arabia had pledged $2 billion and the United Arab Emirates $1 billion to help Pakistan reach a staff-level agreement.

He said that there was hope that after arranging $3 billion the IMF would sign the staff-level agreement but that did not happen. “After the agreement, there is hope that the World Bank will approve $450 million and the Asian Infrastructure Investment Bank will give $250 million.”

However, budget books showed that the government did not expect the $3 billion to come before June 30 and included the inflows in next fiscal year’s estimates.

Officials said that it was informed to the top Chinese diplomat in Islamabad that the government had done its best but the IMF programme was ending on June 30. The IMF was sticking to its position of clubbing the ninth and tenth programme reviews but Dar made it clear on Saturday that there was no chance that the tenth review would be completed.

Dar also said last week that Pakistan was contemplating requesting the bilateral creditors for debt restructuring. But State Bank Governor Jameel Ahmad said in a background briefing that “as of now there is no plan to enter into any debt restructuring”.

Dar once again came down hard on those who were talking about Pakistan’s default.

“We should give hope to the people that Pakistan will come out of this crisis and there is no need to panic about the possibility of default,” the minister said on Monday while addressing a seminar arranged by the Institute of Chartered Accountants of Pakistan (ICAP).

“You being nuclear power and being missile power has not been digested by most of the world,” he said in a veiled reference to geopolitics. He emphasised that Pakistan would manage all international payments and would not seek haircuts.

Published in The Express Tribune, June 13^th, 2023.

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