Pakistan has urged China to grant an extra 10 billion yuan (approximately $1.4 billion), on top of its current swap line, Finance Minister Muhammad Aurangzeb said, according to Reuters. Speaking during the International Monetary Fund and World Bank Group spring meetings in Washington, Aurangzeb noted that Pakistan already holds a 30 billion yuan currency swap with China but now wants to extend it to 40 billion yuan.
“From our perspective, getting to 40 billion renminbi would be a good place to move towards… we just put in that request,” he said. The swap expansion includes Pakistan’s urgent need for stable access to foreign currencies while strengthening its financial reserves. Besides wanting a bigger swap deal, Aurangzeb mentioned that Pakistan is close to launching its first-ever Panda bond, which is debt issued in China’s domestic market and denominated in yuan.
The heads of the Asian Infrastructure Investment Bank (AIIB) and the Asian Development Bank (ADB) have been locked in talks to secure credit enhancements for the bond issuance. The Finance Minister said discussions with both banks have been “constructive” and added, “We want to diversify our lending base and we have made some good progress around that—we are hoping that during this calendar year we can do an initial print.”
Pakistan wants more support as it continues to manage tensions
China has been trying to ink swap deals with several emerging economies, including Argentina and Sri Lanka, and now Pakistan is trying to extend its arrangement to keep up with increased financial needs. Aurangzeb said the plan to issue the Panda bond fits into Pakistan’s strategy to tap new markets and avoid overreliance on traditional lenders.
On the international aid front, he expects the IMF executive board to approve Pakistan’s new $1.3 billion deal under a climate resilience loan program in early May. This approval will also cover the first review of the country’s existing $7 billion bailout package.
Once the IMF board approves, Pakistan will immediately unlock a $1 billion payout, an important aspect of the financial plan Pakistan secured in 2024 to prevent a full-blown economic collapse. Asked about the effects of escalating tensions with India, Aurangzeb said it would be “not helpful” for Pakistan’s economic outlook. Earlier this month, after the killing of 26 men at a tourist site, both countries retaliated. Pakistan shut its airspace to Indian airlines and froze trade ties.
India responded by suspending the 1960 Indus Waters Treaty, which controls how water from the Indus River system is shared. Aurangzeb mentioned that even before the latest dispute, trade between the two countries had already dropped, with a total of $1.2 billion traded last year.
On the domestic economy front, Aurangzeb believes that Pakistan would hit about 3% growth for the financial year ending in June 2025. He said the country is aiming for growth of 4-5% the following year, with longer-term hopes of reaching 6%. He emphasized that expanding financial sources like the Panda bond, enlarging the swap line, and securing IMF funds are all pieces needed to hit those targets.