Pakistan urgently needs a three to five-year extension on the repayment of $12 billion in debt from Saudi Arabia, China, and the UAE to secure approval from the IMF’s Executive Board for a new bailout package, announced Finance Minister Mohammad Aurangzeb on Sunday.
After his return from China, Aurangzeb held a press conference where he clarified that Pakistan is not seeking new foreign loans. Instead, the country is asking for the re-profiling of existing debt. This includes $5 billion from Saudi Arabia, $4 billion from China, and $3 billion from the UAE.He mentioned that the IMF has asked for assurances of external financing for the 37-month period covered by the $7 billion Extended Fund Facility (EFF).The $12 billion was initially borrowed for a one-year term, but due to difficulties in repayment, Pakistan now needs extensions.
The current request is to reschedule this debt for three to five years, which would reduce uncertainty when the debt matures.Out of the $12 billion, $5 billion has already matured as of July. In the past, these creditors have typically provided short-term extensions rather than longer ones.Additionally, the minister shared that Pakistan has started the process of re-profiling debt from Chinese Independent Power Producers (IPPs), which amounts to $15.4 billion and is due by 2036.
A Chinese consultant will be hired to help extend the debt maturity by five to eight years.This move is part of Pakistan’s broader strategy to manage its financial obligations more effectively and to create a more stable economic environment. By extending the repayment periods, Pakistan hopes to ease the financial burden and secure the necessary support from international financial institutions like the IMF.
