Pakistan Engages in Debt Talks with China Amid IMF Structural Reforms

Pakistan's finance minister announced negotiations on reprofiling the country's power sector debt to China, alongside implementing IMF-recommended structural reforms. The efforts will cover project-specific debt with no reductions planned in owed amounts. Concerning IMF's $7 billion bailout, talks also involve Saudi Arabia and the UAE to meet financing needs.

Pakistan has initiated discussions to reprofile its power sector debt to China in conjunction with structural reforms recommended by the International Monetary Fund (IMF), the country's finance minister announced at a press conference on Sunday. The reprofiling will be approached on a project-by-project basis, and a local advisor in China is being sought for assistance.

The finance minister clarified that the focus is on reprofiling, not restructuring, emphasizing that the total owed amount will not be reduced. Reprofiling typically involves extending the repayment period. Pakistan and China, longstanding allies, have previously managed Pakistan's external financing needs through rollovers and disbursements on loans.

Pakistan is also engaging in talks with Saudi Arabia and the UAE to satisfy gross financing requirements under the IMF program. This month, the IMF agreed to a $7 billion bailout for Pakistan, highlighting concerns about high rates of power theft and distribution losses, which contribute to accumulating debt within the power production chain.