Pakistan seeks power loan restructure from China

Pakistan has started discussions with China to restructure its power sector debt and is also considering reforms recommended by the International Monetary Fund (IMF), the country’s finance minister said during a press conference on Sunday.

The country plans to handle the restructuring of Chinese credit for the power sector on a project-specific basis and is seeking to hire a local advisor in China for this task, the minister added.

The finance minister clarified that the debt is being reprofiled, not restructured, as there is no intention to reduce the amount owed. Reprofiling typically involves extending the repayment period.

These neighbouring countries have a history of alliance, and loans from China have previously assisted Pakistan in meeting its external financing requirements.

Pakistan is discussing financing options with Saudi Arabia, the United Arab Emirates, and China to fulfil its funding requirements under the IMF programme. Islamabad requires board-level approval for this.

The IMF recently approved a $7 billion bailout for Pakistan, highlighting concerns about power theft and distribution losses leading to debt accumulation in the production chain.

Attribution: Reuters