Pakistan asked China 10 billion additional yuan – more than $ 1.4 billion – at the top of its current exchange line, said finance minister Muhammad aurangzeb, according to Reuters.
Speaking during the International Monetary Fund and spring meetings of the World Bank group in Washington, Muhammad confirmed that Pakistan already has an exchange of 30 billion yuan with China, but now wants to strengthen it at 40 billion yuan.
“From our point of view, reaching 40 billion renminbi would be a good place to go to … we have just made this request”, Muhammad said. The request for an exchange extension is linked to the urgent need of Pakistan to maintain access to stable foreign currencies while strengthening its financial reserves.
In addition to putting pressure for a greater exchange agreement, Muhammad said that Pakistan is closer to its first Panda obligation, which is issued on the Chinese internal market and labeled in Yuan.
Discussions have been underway with the heads of the Asian Investment in Infrastructure Bank (AIIB) and the Asian Development Bank (BAD) to guarantee credit improvements for bond issues.
Muhammad said that discussions with the two banks were “constructive” and added: “We want to diversify our loan base and that we have made good progress around that – we hope that during this calendar year, we can make an initial impression.”
Pakistan puts pressure on more support while managing new tensions
China has pushed the swap agreements with several emerging economies, notably Argentina and Sri Lanka, and now Pakistan is trying to extend its arrangement to meet growing financial needs. Muhammad said that the Bond Panda plan is part of Pakistan's broader strategy to exploit new markets and avoid overcoming traditional lenders.
On the International Aid Front, Muhammad said that he expects the IMF executive council to approve the new $ 1.3 billion agreement in Pakistan as part of a climate resilience loan program in early May. This approval will also cover the first 7 billion dollar rescue examination for the country.
Once the IMF board of directors has been withdrawn, Pakistan will immediately unlock a billion dollars, an essential element of the financial plan that Pakistan obtained in 2024 to prevent a complete economic collapse.
Asked about the effects of climbing tensions with India, Muhammad said it would be “non -useful” for Pakistan's economic prospects. Earlier this month, after the murder of 26 men on a tourist site, the two countries retaliated. Pakistan has closed its airspace to Indian airlines and frozen trade links.
India responded in suspension of the Industry Water Treaty in 1960, which controls the way in which the water from the Indus River system is shared. Muhammad stressed that even before the last dispute, trade between the two countries had already been considerably reduced, totaling only $ 1.2 billion last year.
Returning to the domestic economy, Muhammad has planned that Pakistan would reach growth of around 3% for the financial year ending in June 2025. He said that the country was aimed at growth of 4 to 5% the following year, with longer -term hopes to reach 6%.
He stressed that the expansion of financial sources such as the Panda obligation, the expansion of the exchange line and the securing of the IMF funds are all the necessary parts to reach these targets.
Meanwhile, in the midst of Pakistan's strengthening relations with China, the US Treasury Secretary, Scott Bessent, met Masato Kanda, the president of the Asian Development Bank on Friday. Bessent pressed Kanda to start moving China to the “graduation” of the BAD loan, arguing that the Chinese economy no longer needs the same level of bank development assistance.
The Treasury Department said that Bessent had also pushed Kanda to focus on “best value-price supply and underlined the need for an“ energy strategy all to be coated ”, including financing options for civil nuclear energy projects.
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