Beijing/Islamabad: Though already steeped under outstanding loans amounting to nearly $15 billion to Beijing, cash-strapped Pakistan is again planning to seek a $600 million loan from ‘all-weather friend’ China to tide over the upcoming fiscal.
Pakistan Prime Minister Shehbaz Sharif, who is on a five-day visit to China to seek investments to revive Pakistan’s cash-strapped economy, is to meet with the Industrial and Commercial Bank of China (ICBC) and the Bank of China to authorize a $600 million loan for his country.
The discussions are to focus on convincing the Chinese banks to relax their stringent loan disbursement conditions.
Notably, the stringent conditions include a high interest rate of up to 8 percent and a condition linking the loan to the payment schedule of Chinese Independent Power Producers (IPPs).
Since July 2023, the Pakistan government has been in back-to-back discussions to secure this loan. Efforts are still underway to ensure that the $600 million loan is secured for the next financial year.
Pakistan is seeking $600 million in new loans, $300 million each from the two Chinese banks.
China has provided $21.2 billion in loans to Pakistan since 2000, accounting for 30 percent of overall funding. These loans were made to avoid default and to boost the country’s forex reserves, ProPakistani website said.
A day before Sharif’s China visit, Pakistan made a payment of PKR 70 billion to Chinese power plants, aimed at reducing the outstanding dues to the Chinese companies. The Prime Minister’s Office had desired to clear at least PKR150 billion in payments ahead of the visit.
This is the 72-year-old leader’s first visit to China after he took over as prime minister for the second term after his Pakistan Muslim League-Nawaz (PML-N) party-led coalition government assumed power in March.
His visit is aimed to secure delays in pending contractual obligations to Chinese companies, reschedule rollovers and budget support loans till the end of the under consideration Extended Fund Facility programme and launch the phase II of the China Pakistan Economic Corridor.
On Wednesday, Sharif assured full security to the Chinese personnel working in Pakistan from the recurring terrorist attacks targeting them.
He said his government had taken various measures to ensure fool-proof security to protect the lives of Chinese workers in Pakistan.
“I will spare no effort to protect the lives of Chinese workers and assure and guarantee that we will provide them security more than our children. This will never happen again,” he said.
Referring to the March 25 terrorist attack in Besham in Swat, Khyber Pakhtunkhwa, in which five Chinese engineers and their Pakistani driver were killed, he said it was “one of the saddest” days of his life when the whole nation felt saddened. Pakistan paid USD 2.58 million as compensation to the families of those killed in the attack.
The Chinese government has asked for a thorough probe into the deadly terrorist attack and to provide foolproof security of its citizens after the deadly attack.
Islamabad has claimed that the terrorists came from Afghanistan, a charge that Kabul has repudiated.
In an interview to the state-run Xinhua news agency ahead of his visit, Sharif said that Pakistan considers China one of the most trusted friends, and that besides being iron brothers, and unshakable friends, “our hearts beat together”.
