Pakistan to seek $5bn in loans from China, Russia and Kazakhstan

January 31, 2022 (MLN): Pakistan has decided to seek $5 billion in loans from China, Russia and Kazakhstan to stabilize its decreasing foreign exchange reserves.

According to the media reports, Pakistan plans to borrow $3 billion from China to support foreign exchange reserves and $1 billion each from Russia and Kazakhstan for expanding the road networks.

In this regard, the finance ministry has finalized the plan for the loan and an agreement will likely be signed with China during Prime Minister Imran Khan's visit to Beijing next week.

Prime Minister will visit the Chinese capital on February 3 to attend the opening of the Beijing Winter Olympics and to also meet the top Chinese leadership on the sidelines for bilateral talks.

The government is considering requesting China to approve another $3 billion loan to China's State Administration of Foreign Exchange, known as SAFE deposits, a senior Ministry of Finance official said, according to the Express Tribune.

China has already placed around $11 billion with Pakistan in the shape of commercial loans and foreign exchange reserves support initiatives, including $4 billion in SAFE deposits.

The Chinese money is part of the country’s current official foreign exchange reserves recorded at $16.1 billion.

In the last fiscal year, the country had paid more than 26 billion rupees in interest costs to China for using $4.5 billion in Chinese trade finance facility to repay maturing debts.

The government will also seek Chinese investment in six priority areas by highlighting the country's competitive advantages in areas such as cheap but skilled labour, access to the world's two wealthiest continents and tax exemptions.

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