Debt-ridden Pakistan seeks $2 billion commercial loans from China

Islamabad is seeking commercial loans of $2 billion from Beijing amid the debt-ridden country seeking a bailout package from International Monetary Fund (IMF). China has already refused to provide balance of payment (BoP) support to Pakistan.

Business Recorder said in a report: "According to well-informed sources, a technical team of the State Bank of Pakistan and Finance Ministry paid a visit to China recently to talk about various modalities of loans and interest rate, however, an agreement wasn't inked because of differences and conditions imposed."

It added: "Islamabad had reached out to Beijing for $3 billion BoP support and after the conclusion of Prime Minister Imran Khan's visit a technical team including Secretary Finance Arif Khan and State Bank of Pakistan (SBP) Governor Tariq Bajwa held talks with Chinese authorities but the result of the negotiations bore no fruit".

Reportedly, the meeting between the two sides ended in 30 minutes and the Chinese officials' attitude was described as "not friendly", said a Pakistani business daily.

The leader of the International Monetary Fund (IMF) mission, Herald Finger visited Pakistan last month and left the country without giving any details of the outcome of his meetings. However, IMF mission is expected to visit Pakistan in the mid of January 2019 to conclude the $8 billion bailout programme.

Business Recorder quoted sources saying that the IMF has asked for further clarifications from the government on revenue yield initiatives, real-time exchange rate, privatisation and retrenchment of current expenditure. Pakistan media reports the IMF also wants to know the details of Chinese loans made to Pakistan for the multi-billion dollar China-Pakistan Economic Corridor (CPEC), which the Khan government is reluctant to provide. There is concern, notably in the United States that Pakistan's IMF loans may go towards paying off debt owed to Beijing.