In an apparent attempt to obtain the International Monetary Fund’s permission for a $7 billion economic bailout by next month, Prime Minister Shehbaz Sharif stated on Friday that he has sent in a letter to the Chinese government demanding debt reprofiling for Pakistan.
In order to secure a 37-month International Monetary Fund (IMF) bailout package and reduce consumer tariffs and foreign exchange outflows from the energy sector, Pakistan reportedly sought the reprofiling of more than $27 billion in debt and liabilities with friendly nations, including China, Saudi Arabia, and the United Arab Emirates, according to a Dawn report earlier this week.
In addition, Islamabad has asked Beijing to reprofile about $15 billion in energy sector obligations and convert projects reliant on imported coal to domestic coal in order to free up funds due to challenges with prompt repayment.
The prime minister added, “I have written a letter to China, it’s a matter of public domain now, for [debt] reprofiling,” before to today’s National Assembly (NA) session, during a federal cabinet meeting.
“Modifications of the aggregate timetable of future country repayments through refinancing, debt replacement, or renegotiations” are referred to as debt reprofiling, according the World Bank.
The procedure can assist a nation that is dealing with the simultaneous maturity of several loans or exposure problems, including changes in the currency composition of its liabilities. Additionally, it can assist a nation in reducing currency risk, which typically makes problems with debt sustainability worse.
The Chinese President Xi Jinping has showed “keen interest in his idea” of using local coal to reduce imports, PM Shehbaz told the cabinet.
“I informed the president that thar coal could reduce imports and save the nation $1 billion in foreign exchange,” the prime minister stated.
Also, he mentioned that Finance Minister Muhammad Aurangzeb’s recent visit to China yielded “very good meetings,” adding that structural changes aimed at lowering circular debt were being implemented.
