Finance Minister Mohammad Aurangzeb announced on Sunday that Pakistan urgently requires a three-to-five-year extension on the repayment of $12 billion in debt from Saudi Arabia, China, and the UAE. This extension is crucial for Pakistan to secure approval from the IMF’s Executive Board for a new bailout package.
Aurangzeb, who returned from China, clarified in a press conference that Pakistan is not seeking new loans but rather requesting a re-profiling of its existing debt. This debt includes $5 billion owed to Saudi Arabia, $4 billion to China, and $3 billion to the UAE. The IMF has requested assurances of external financing for the 37-month period covered by the $7 billion Extended Fund Facility (EFF). Originally borrowed for a one-year term, the debt now requires extensions due to repayment difficulties.
Pakistan is seeking to reschedule the debt over three to five years to alleviate uncertainty associated with its maturity. Of the $12 billion, $5 billion has already matured as of July. Historically, these creditors have offered short-term extensions rather than longer ones.
Additionally, Pakistan is in the process of re-profiling $15.4 billion in debt from Chinese Independent Power Producers (IPPs), due by 2036. A Chinese consultant will be hired to assist in extending this debt’s maturity by five to eight years. This strategy is part of Pakistan’s broader effort to manage its financial obligations more effectively and stabilize its economic environment. By extending repayment periods, Pakistan aims to ease its financial burden and secure essential support from international financial institutions like the IMF.