ISLAMABAD: Prime Minister Shehbaz Sharif said on Friday he wrote a letter to the Chinese government requesting debt reprofiling as his administration seeks a $7 billion loan from the International Monetary Fund (IMF), which has consistently focused on the country’s debt obligations and energy sector issues.
Last month, Pakistan reached a staff-level agreement with the IMF for a fresh loan, which it expects to be validated by the Fund’s executive board later this month. The IMF has repeatedly expressed concerns about Pakistan’s plans to manage its escalating circular debt in the energy sector while also addressing its external financial obligations.
“I have written to China for [debt] reprofiling,” the prime minister informed his cabinet ministers.
Debt reprofiling is a financial strategy used to restructure a country’s existing debt obligations. It involves extending the maturity dates of debt, reducing interest rates or altering other terms of the debt agreements to make repayment more manageable.
The IMF previously raised concerns about Pakistan’s external financing gaps, prompting the country to seek assistance from friendly nations like Saudi Arabia, the United Arab Emirates and China, which shored up its foreign exchange reserves by depositing significant amounts into the central bank.
These nations also rolled over existing funds when Pakistan requested it, thereby providing additional relief to its financial situation.
The prime minister pointed out his government had also sent Finance Minister Muhammad Aurangzeb to China for talks on power sector debt relief.
He said he had a detailed conversation with President Xi Jinping during his own visit to China, where Xi asked about Pakistan’s plans to convert to coal-based projects under the multibillion-dollar joint economic corridor project.
Sharif told him it would help Pakistan save “$500 million in investment, and annually, we will save $1 billion, which will be a very significant thing.”
He maintained that his administration was aware of people’s hardship amid rising power tariffs causing inflationary pressure. But he noted that it was taking steps to provide relief to power consumers, though it would take some time before these efforts produce the desired outcomes.
“Rome was not built in a day, and you cannot expect instant results,” he added.
Pakistan PM writes to China for debt reprofiling as IMF loan approval nears
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Pakistan PM writes to China for debt reprofiling as IMF loan approval nears
- Debt reprofiling involves altering the terms of loan agreements to make it more manageable for a country
- IMF has consistently focused on Pakistan’s debt obligations, energy sector issues during talks with government
Pakistan’s deputy PM discusses ways to boost economic, trade ties with Iran
- Both countries agreed in August to increase bilateral trade to $10 billion by 2028
- Pakistan and Iran have been working to stabilize relations after strained security ties
ISLAMABAD: Pakistan’s Deputy Prime Minister Ishaq Dar presided over a meeting to discuss economic and trade cooperation with Iran, the foreign office said on Friday, as the neighboring countries seek to expand ties.
The development took place during an inter-ministerial meeting on Pakistan-Iran bilateral relations chaired by Dar in Islamabad. Pakistan and Iran have been working to stabilize ties following a period of strained security relations.
Both countries have been working to enhance bilateral trade, setting up border markets and exploring barter trade to circumvent banking and currency restrictions. Sanctions and foreign exchange shortages remain key hurdles for Iran, making these alternative systems central to its trade strategy with Pakistan.
“The meeting reviewed ongoing cooperation across a range of sectors and discussed ways to further enhance economic and trade ties,” the foreign office said in a statement.
“The DPM/FM reaffirmed Pakistan’s commitment to deepening engagement with Iran in key priority areas.”
In December, the foreign ministers of Iran and Pakistan vowed to strengthen bilateral cooperation in trade and connectivity while working for regional peace.
Iranian President Dr. Masoud Pezeshkian also visited Pakistan in August, during which both countries signed agreements to increase bilateral trade to $10 billion by 2028.
