Pakistan eyes bigger China swap line, expects US financing decision soon

Pakistan is considering expanding its 30 billion yuan swap line with China when it expires in 2027, Finance Minister Muhammad Aurangzeb stated. The minister anticipates a US response within two months on a proposed $10bn exchange stabilisation facility. Pakistan relies on external financing to maintain foreign exchange reserves and meet debt repayments, making support from China, Gulf states, and multilateral lenders essential for economic stability and investor confidence.

The existing swap line has been fully utilized, and the government will decide the additional financing amount upon renewal. Aurangzeb mentioned that China is a long-standing strategic partner, and the US leadership relationship is strong. However, concerns about seeking support from both China and the US simultaneously were dismissed as an "and-and" discussion.

Elevated crude oil prices due to the Middle East conflict, which started in February, remain uncertain, with potential risks to the government's 4% growth target for the fiscal year. Pakistan has sufficient oil stocks for September and October, and an institutionalised mechanism is monitoring the situation daily. The government currently does not plan to seek additional International Monetary Fund (IMF) financing or emergency support from the US.

An IMF mission is scheduled for the next week to review Pakistan's $7bn programme and Resilience and Sustainability Facility.