Pakistan is looking to secure a $3-billion loan equivalent of 529 billion Pakistani Rupees from China and investments in almost half-a-dozen sectors during the Prime Minister’s visit to the capital of China next week, as per media reports.
The Prime Minister of Pakistan, Imran Khan is set to visit Beijing on February 3 to attend the opening of the Winter Olympics and will also be expected to meet the top leadership of China on the sidelines for bilateral talks with the nation. A final meeting to shape the agenda for the visit will take place on Tuesday. An official from the finance ministry stated that the government of Pakistan was considering requesting China to approve another loan worth $3 billion in China’s State Administration of Foreign Exchange, also known as SAFE deposits to boost the nation’s foreign exchange reserves.
China has already placed about $11 billion equivalent of 1.940 trillion PKR with Pakistan in the shape of commercial loans and foreign exchange reserves support initiatives. These also include around $4 billion, equivalent to PKR 705 billion in China’s State Administration of Foreign Exchange. The Chinese money is part of Pakistan’s current official foreign exchange reserves, and it is recorded at $161 billion.
In the previous fiscal year, Pakistan had paid over PKR 26 billion in interest charges to China for only using a $4.5 billion Chinese trade finance facility to repay the maturing debt. Pakistan also received a loan worth $3 billion from Saudi Arabia last month which is equivalent to PKR 529 billion, the nation has already used all of that.
Pakistan aims to secure the Chinese investment in 6 priority sectors by highlighting the competitive advantages of the nation’s cheap but skilled labour, geographical access to Europe and Asia and the tax exemptions as well. The Chairman of Board of Investment Afzar Ahsan said that they will be marketing textile, footwear, pharmaceutical, furniture, agriculture, automobile and IT sectors to secure the investments by China.
The authorities of Pakistan believe that the labor provided by them is two times cheaper than that of China. This is a great offer for the relocation of the dying Chinese industries. All these areas and the competitive advantages are already known to the investors but they are hesitant to invest large amounts of money in Pakistan because of the inconsistent fiscal and energy policies adopted by the government.