China is working on a request by Pakistan to roll over a $2-billion loan that matured last week, a top finance ministry official told Reuters.

The rollover is critical for the country as its foreign exchange reserves have dipped to just four weeks’ worth of imports at a time when it is locked in talks with the International Monetary Fund (IMF) to secure bailout funds.

“It is a work in progress,” the official said in a text message on Wednesday, on condition of anonymity. “Formal documentation is underway.”

A formal announcement will be made, the source added, but gave no further details. The loan matured on March 23.

As Pakistan struggles to avert a default on its obligations, the only help so far has come from longtime ally Beijing, through a refinancing of $1.8 billion already credited to the State Bank of Pakistan (SBP).

The IMF funding is critical to unlock other external financing avenues, and the two have been negotiating since early February to resume $1.1 billion in funding held since November, part of a $6.5 billion bailout agreed in 2019.

One of the lender’s last remaining conditions for the release of the tranche is securing an assurance on external financing to fund the country’s balance of payments.

Meanwhile, the government on Wednesday said to have achieved “progress” in external financing from Saudi Arabia and the United Arab Emirates.

The statement came from Minister of State for Finance and Revenue Dr Aisha Ghaus Pasha before a parliamentary panel on a day UAE’s ambassador in Islamabad Hamad Obaid Ibrahim Salim Al-Zaabi met Finance Minister Ishaq Dar and expressed UAE’s interest “in augmenting and furthering investment in various sectors of the economy of Pakistan”.

Testifying before the Senate Standing Committee on Finance and later talking to journalists, Dr Pasha said “there has been some progress from Saudi Arabia and UAE on external financing” — the only pending thing after the completion of technical negotiations.

“There are some indications that something is coming very shortly and the matters with IMF are close to settlement as the Fund had been looking for commitments from the brotherly countries. There has been some progress on that,” she reiterated without elaborating but added that a trust deficit had been delaying the SLA with IMF.

Responding to a question, she said Pakistan’s external financing needs were higher but support from friendly countries followed by the IMF tranche would unblock flows from other multilateral agencies and the matters would move forward towards normalcy.

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Time for dialogue
Updated 24 Jun, 2024

Time for dialogue

If the PML-N and PTI remain mired in mutual acrimony, an ever-widening gap will continue to allow non-political forces to assert themselves.
Property taxes
24 Jun, 2024

Property taxes

ACCORDING to reports in the local media, along with the higher taxes imposed on real estate in the recent budget, ...
Fierce heat
24 Jun, 2024

Fierce heat

CLIMATE change is unfolding as predicted by experts: savage heat, melting glaciers, extreme rainfall, drought, ...
China’s concerns
23 Jun, 2024

China’s concerns

Pakistan has no option but to neutralise militant threat to Chinese projects, as well as address its business and political stability concerns.
War drums
23 Jun, 2024

War drums

If it is foolish enough to launch another war in Lebanon, Tel Aviv will be solely responsible for setting the Middle East on fire.
Balochistan budget
23 Jun, 2024

Balochistan budget

BALOCHISTAN’S Rs955.6bn budget for the fiscal year 2024-25 makes many pledges to the poor citizens of Pakistan’s...