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

Pakistan plans to expand its 30 billion yuan swap line with China when the current agreement ends in 2027, according to Finance Minister Muhammad Aurangzeb. The minister anticipates a response from the United States regarding a proposed $10 billion exchange stabilisation facility within two months. Pakistan continues to rely on external financing to support its foreign exchange reserves and meet debt repayments, making support from China, the Gulf states, and multilateral lenders crucial for maintaining economic stability and investor confidence.

All 30 billion yuan of the existing swap line has been fully utilized, and the government has not yet determined the additional financing it may seek upon renewal. The proposed $10 billion facility could aid in Boeing aircraft purchases by Pakistan International Airlines and a $5 billion programme to upgrade oil refineries. Aurangzeb emphasized that China is a long-standing strategic partner, and discussions with the United States are taking place simultaneously.

The US Treasury, DFC, and EXIM have not yet commented on the matter. Despite rising oil prices due to the Middle East conflict, Pakistan has managed the initial price spike well, but prolonged disruptions could jeopardize the government's 4% growth target for the fiscal year. The country currently has enough oil stocks to last through September and October, with planning underway for November supplies.

Pakistan has no plans to seek additional funding from the International Monetary Fund at this time, as it currently believes the situation can be managed. An IMF mission is scheduled for next week to review Pakistan's $7 billion programme and the Resilience and Sustainability Facility.