According to the sources, Pakistan has asked China to postpone the current $ 10,735 billion loan repayment and provide another $ 10 billion loan as a deposit fund. If approved, Pakistan will owe China more than $ 20.74 billion in loans and deposit funds. During a recent visit to China by Prime Minister Imran Khan, Finance Ministry suggested that the Chinese government postpone the payment of a $ 4 billion secure deposit and a commercial loan of $ 6,735.
Safe deposits and commercial loans:
A security deposit of $ 2 billion will expire on March 23, 2022, and a $ 2,235 billion transaction loan will mature on March 25, 2022. The Department of Finance also submitted requests to postpone the payment of this secure deposit and commercial loan in January this year. Other safe deposits and commercial loans will mature over time.
COVID-19 pandemic:
In addition, the Pakistan State Bank (SBP) also recommended that China increase the exchange rate to more than $ 15 billion. Pakistan has also asked China to use its Special Drawing Rights (SDRs) allocation to the International Monetary Fund (IMF), which was allocated to its members in August 2021 to help them cope with the COVID-19 epidemic. China’s share in the allocation is SDR 29.22 billion, and Pakistan proposed to use it in a bilateral program or through an IMF program.
Power Purchase Agreements:
Pakistan also negotiated Power Purchase Agreements (PPAs) with Independent Power Producers (IPPs), which resulted in significant reductions in electricity costs for these IPPs. Pakistan also proposed renegotiating PPAs and IPPs operating under the CPEC in the same lines. If PPAs are successfully negotiated, the country will save $ 14.29 billion due to electricity costs over the life of these IPPs.
Ministry of Finance has instructed the Pakistani Ambassador:
However, China commended Pakistan for extending $ 14.29 billion in aid in any other way instead of renegotiating IPPA PPAs under the CPEC. The Ministry of Finance has instructed the Pakistani Ambassador to China, Moin ul Haq, to follow up on the Chinese authorities’ proposals. These proposals are linked to the stability of the foreign account and budget requirements.
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