Negotiations between two Chinese banks and the Government of Pakistan over a proposed $600 million loan have hit a snag, Finance Ministry sources told ProPakistani.
Sources said that the loan arrangement, comprising $300 million from the Bank of China and another $300 million from the Industrial and Commercial Bank of China (ICBC), could not be finalized.
According to sources, the banks have imposed specific conditions on pending payments for Chinese Independent Power Producers (IPPs). These conditions involve installment-based repayments, as per Finance Ministry sources.
In response to the conditions set by the Chinese banks, the Finance Ministry has asserted that the $600 million loan from the Chinese commercial banks should be unconditional. Notably, the loan was intended to be acquired at an interest rate exceeding 6 percent, repayable in one year.
Pakistan has been engaged in ongoing consultations regarding the potential loan since July 2023. However, with the current dispute over conditions and pending approvals, the fate of this financial arrangement remains uncertain.
It bears mentioning that China has been providing financial support to Pakistan in the form of SAFE deposits, concessionary loans, and commercial loans to help stabilize its external sector. In June 2023, China helped Pakistan avert a further drop in its critically low foreign currency reserves by relaxing the repayment of a pending $1.3 billion loan.
We want unconditional loan.
Beggars cannot be the choosers.