ISLAMABAD:
Pakistan’s Finance Minister Muhammad Aurangzeb is expected to take up the issue of rescheduling guaranteed debt with his Chinese counterpart in Washington next week, on the sidelines of the International Monetary Fund’s (IMF) spring meetings.
The finance minister is also likely to meet the managing director of the IMF and an assistant secretary of the US Treasury, according to government sources.
Aurangzeb will meet Lan Fo’an, Finance Minister of China, on Wednesday during his six-day visit to attend the annual meetings. Finance ministry officials said one of the key issues will be Pakistan’s pending request for China to reschedule $3.4 billion in debt for two years, in order to bridge a foreign financing gap.
Secretary Finance Imdad Ullah Bosal, State Bank of Pakistan (SBP) Governor Jameel Ahmad, and Economic Affairs Secretary Kazim Niaz are also departing for the US on Sunday to participate in the spring meetings.
Pakistan’s Deputy Prime Minister Ishaq Dar had formally made the rescheduling request during his last visit to Beijing, but the deal remains pending. The government has asked the Export-Import (Exim) Bank of China to rearrange its loans. Earlier, in September last year, the finance minister had also written to the Exim Bank, requesting the rescheduling.
This development comes on the heels of a $1.3 billion repayment of Chinese commercial debt, including $300 million paid this week. Pakistan is in talks with the Chinese bank for refinancing the loan. However, there is also a view within the government that Pakistan should not seek a renewal of this loan following an unexpected $1 billion boost from remittances in March, which totalled $4.1 billion.
Aurangzeb is also scheduled to meet with the Finance Minister of Saudi Arabia, Mohammed Aljadaan.
Unlike in previous years, when Pakistan would be granted meetings with top-ranking US Treasury officials, this time, a level-four US Assistant Secretary of the Treasury for International Finance, Robert Kaproth, may meet with the finance minister next week.
While interaction with US authorities has gradually increased in recent weeks, no senior US official has met with Pakistani government representatives. However, last month, the National Security Advisor and US Secretary of State held phone conversations with Pakistan’s deputy prime minister.
Aurangzeb is also expected to meet James C Cruse, Acting President and Chairperson of the US Exim Bank, according to sources.
The US Exim Bank has expressed willingness to extend around $1 billion in loans for the Reko Diq project, which faces a $3 billion financing gap. However, it sought preferential creditor statussomething Islamabad did not agree to previously.
Last month, the government revised the total cost of the first phase of the Reko Diq copper and gold mines project to $6.8 billiona 58% increase due to rising prices and an expanded project scope. Of the $6.8 billion, $3 billion will be raised through debt.
Negotiations for the debt are at an advanced stage and are being led by an arm of the World Bank Group, which is expected to provide $300 million in loans for the project. The remaining $3.7 billion will be contributed by the shareholders as equity investments, in accordance with their existing stakes.
Aurangzeb may also meet officials of the US International Development Finance Corporation (IDFC) to discuss cooperation in Pakistan’s privatisation programme, officials said.
He is also expected to meet with Kristalina Georgieva, Managing Director of the IMF, to discuss progress on the $7 billion programme. Last month, Pakistan and the IMF reached a staff-level agreement for the $1 billion second tranche. However, the IMF has yet to announce a formal board meeting date for its approval.
The minister may also hold meetings with IMF Assistant Director Nikolay Gueorguiev, Deputy Managing Director Nigel Clarke, and Jihad Azour, Director for the Middle East and Central Asia.
Aurangzeb will also take part in an IMF-arranged panel discussion on Pakistan’s medium-term revenue mobilisation strategy. So far, Pakistan’s attempts to raise revenue have largely burdened the salaried class, while efforts to extract more from traders have failed.
Under the IMF programme, provinces have passed new agricultural income tax laws, but these have yet to be operationalised.
Aurangzeb is also
expected to meet with Masato Kanda, President of the Asian Development Bank, and Ajay Banga, President of the World Bank Group. A meeting with Martin Raiser, Vice President of the South Asia Region at the World Bank, is also planned.
One key event during the spring meetings includes a special briefing to embassies of the Climate Vulnerable Forumalso known as the Vulnerable 20 Club. Aurangzeb will meet with Mohamed Nasheed, Secretary General of the Forum.
The V20’s agenda focuses on addressing climate vulnerabilities in its 68-member countries, with an emphasis on climate finance, disaster risk reduction, and resilience-building. The group includes countries from Africa, Asia, the Caribbean, Latin America, the Middle East, and the Pacific, and aims to promote shared prosperity and sustainable development through coordinated global efforts.
There will also be a meeting of the Coalition of Finance Ministers for Climate Action (CFMCA), which Aurangzeb is expected to attend.
The finance minister will also speak at the Atlantic Council on Pakistan’s economic prospects through 2025 and beyond. He will brief investors, invited by Jefferies International, on the economic outlook, fiscal and monetary developments, and IMF-related reforms.
Additionally, he is scheduled to meet with tobacco firm Philip Morris International.
