SUMMARY of the Article “Re-profiling Chinese debt,” by Khurram Husain, Dawn, August 1st, 2024

The article “Re-profiling Chinese debt” by Khurram Husain discusses Pakistan’s attempt to renegotiate $27 billion worth of debt owed to China, Saudi Arabia, and the UAE. Finance Minister Muhammad Aurangzeb revealed this during a press conference, though he initially focused on tax burdens. His visit to China, following Prime Minister Shehbaz Sharif’s trip a month earlier, aimed to address this debt under the IMF’s requirements. The discussions are in the early stages, involving talks with the Chinese power project sponsors and financial market players, including the People’s Bank of China. The challenge lies in meeting the equity return guarantees for these sponsors amid Pakistan’s foreign exchange constraints. Aurangzeb mentioned hiring local advisers for structuring their approach and floating a Panda bond, though skepticism exists about its feasibility given Pakistan’s current financial state. The urgency is emphasized by the need to reach an agreement before the IMF staff-level agreement can be finalized. Delays could risk economic stability, with the IMF likely to show limited leniency, as indicated by » Read More…