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Finance Minister Mohammad Aurangzeb announced on Sunday that Pakistan requires a three to five-year extension on $12 billion in debt from Saudi Arabia, China, and the UAE to obtain approval for a new IMF bailout package.
During a press conference following his return from China, Aurangzeb clarified that Pakistan is not seeking new foreign loans but rather a re-profiling of existing debt. The debt in question includes $5 billion from Saudi Arabia, $4 billion from China, and $3 billion from the UAE.
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The IMF has requested 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 Pakistan now faces difficulties in repayment.
Aurangzeb explained that the current request is to reschedule this debt for three to five years, which would reduce uncertainty when the debt matures. Of the $12 billion, $5 billion has already matured as of July. Historically, these creditors have typically provided short-term extensions rather than longer ones.
The minister also revealed that Pakistan has initiated the process of re-profiling debt from Chinese Independent Power Producers (IPPs), amounting to $15.4 billion due by 2036. A Chinese consultant will be hired to help extend the debt maturity by five to eight years.
This debt restructuring effort is part of Pakistan’s strategy to manage its financial obligations and create a more stable economic environment. By extending the repayment periods, the country aims to ease its financial burden and secure necessary support from international financial institutions like the IMF.
