Finance Minister Aurangzeb appeals to Beijing for extended debt repayment and a larger currency swap facility amidst low foreign exchange holdings.
Key Takeaways:
i) Pakistan’s Finance Minister Muhammad Aurangzeb has formally requested China to roll over its guaranteed debt.
ii) Islamabad is also seeking an increase in the $4.3 billion currency swap agreement with Beijing.
iii) These requests were made during a meeting with China’s Finance Minister Lan Fo’an on the sidelines of the IMF spring meetings.
Money Matters Monitoring – In a recent report by The Express Tribune, titled “Pakistan seeks Chinese debt rollover” by Shahbaz Rana, concerns regarding Pakistan’s foreign exchange reserves and debt obligations have come to the forefront. The article highlights Finance Minister Muhammad Aurangzeb’s appeal to China for significant financial relief. According to Rana, “Finance Minister Muhammad Aurangzeb on Wednesday requested China to roll over the guaranteed debt and to also increase the current size of the $4.3 billion currency swap agreement aimed at cushioning the low foreign exchange reserves.”
During a bilateral meeting with Chinese Finance Minister Lan Fo’an on Wednesday, held on the sidelines of the International Monetary Fund’s (IMF) spring meetings, Aurangzeb presented these crucial requests. Finance Ministry officials described the discussion as “very positive and constructive,” signaling a potential willingness from the Chinese side to consider Pakistan’s needs.
The specific request for debt rollover pertains to the guaranteed debt owed to China, the details of which were not specified in the article. However, the need for this rollover underscores the pressure Pakistan faces due to upcoming debt maturities. Furthermore, Pakistan is actively seeking to augment the existing CNY 30 billion ($4.3 billion) currency swap agreement. This facility has already been utilized by Pakistan to meet its debt obligations, indicating its importance in managing the country’s liquidity. In October of the previous year, Pakistan had requested an additional CNY 10 billion (approximately $1.4 billion) under this swap arrangement. If approved, the total facility would expand to around $5.7 billion, providing a significant boost to Pakistan’s foreign exchange reserves.
Pakistan’s gross official foreign exchange reserves currently stand at a low of approximately $10.6 billion. The government aims to increase this figure to over $14 billion in the next two months through a combination of new loans and anticipated higher remittances. The support from China, through both debt rollover and an enhanced currency swap facility, is considered vital in achieving this goal and stabilizing the nation’s economy.
It is important to note that Pakistan has been actively managing its debt with China. In March 2025, Pakistan repaid a $1 billion commercial loan to the Industrial and Commercial Bank of China (ICBC) in two equal installments. However, another $300 million loan tranche from ICBC is due next month, highlighting the continuous need for refinancing and new financial inflows. Earlier in March, China had already extended the repayment period of a $2 billion loan to Pakistan by one year, providing some much-needed fiscal space.
The government is also seeking the rescheduling of the Export-Import (Exim) Bank of China’s debt maturing until September 2027. These ongoing efforts reflect Pakistan’s strategy to navigate its complex debt landscape and secure financial stability through close cooperation with its key economic partner, China.
