Has facility in repayment of Chinese loans become a 'lifeline' for Pakistan?

There have been statements made by the United States in the past regarding the revision of China's debt repayment and getting facilities in this regard, but recently a statement by Pakistan's Foreign Minister Bilawal Bhutto once again drew attention to this aspect. Withdrawn.

According to Dawn newspaper, Bilawal Bhutto has said in an interview given to Foreign Policy magazine that Pakistan has not talked about restructuring, delaying or swapping the repayment of loans from China, and even if it happens, it will not. It will be on Pakistan's terms.

Pakistan needs the help of the international community to get the flood-affected Pakistani economy out of the current crisis, but according to experts, unlike the 2010 floods, this time after a more large-scale disaster, Pakistan needs help from both the United States and China. Couldn't get the help he needed.

On behalf of the United States, this justification has been presented in this context that the resources it had in the year 2010 are not available this time due to various reasons, but at the same time Pakistan has been urged to take loans from China. Rebates and attempts to restructure them.

In response, a statement from the Chinese Foreign Ministry spokesperson said that the US should do something "genuine and useful" for flood-affected Pakistan and condemned the US's "unnecessary criticism of Pakistan-China cooperation". It has also been condemned. 

It should be noted that on Friday, the United States has facilitated the suspension of a loan of 132 million dollars to Pakistan and it has been said that their priority is to provide resources to Pakistan. 

Earlier, the proposal for debt swap and restructuring was proposed by UN Secretary General Antonio Guterres during his visit to Pakistan. 

In this regard, in a paper published by the United Nations last week, it was said that the creditor countries and institutions should immediately suspend the process of repayment of external loans from Pakistan and restructure them. 

So does this mean that now Pakistan has no choice but to seek loan waivers from China to deal with this economic crisis and flood damage? And is Pakistan reluctant to do so?

 How much debt has Pakistan taken from China? 

If we look at the foreign loans taken by Pakistan, according to the report released by the IMF at the beginning of this month, Pakistan has borrowed 30 billion dollars from China, which is its total external debt. Debt accounts for one-third.

Khurram Hussain, a journalist who has a close eye on economic affairs, while explaining this in detail, says that Pakistan's difficulty in borrowing from China is serious. 

He said while talking to the BBC, "The reason for this is that it is not a single loan that Pakistan has taken from China, but it is in different forms." 

It has your reserve extension facility, deposits, commercial loans and project finance and related loans. So when it comes to restructuring, it is very complicated.

In this regard, the head of the think tank SDPI, Abid Qayyum Silhari, while talking to the BBC, said that in Pakistan's external debt, the loan taken from the members of the Paris Club comes first, followed by China. 

He said that the impression that China lends the most to Pakistan is wrong and China's loans are long-term and their immediate repayment is not necessary. 

However, he also said that 'it is a common thing that whenever an institution or a country gives you a loan, they ask about other loans taken by you before doing so.' 

Why is it so difficult to get loan repayment facility?

Here the question arises as to why it has become so difficult for Pakistan to take loan repayment facility. 

According to Khurram Hussain, the reason for this is the increase in the number of countries with the capacity to lend. 

He says that 'Pakistan has done debt restructuring in the past too, but at that time you had to go to a single window and talk to the Paris Club for a loan, because those you borrowed from. They used to be represented there.' 

He gave an example and said that after the year 2002, Pakistan got a huge debt restructuring that was given in relation to the Afghan war and Pakistan got 10 or 12 billion dollars at that time.

However, the situation is different now and the lending countries include China, Saudi Arabia and the United Arab Emirates besides the Paris Club. 

When you go to the Paris Club, they say talk to China first  he says. When they go to China, they say that first give us this assurance from the Paris Club. 

When you go to Saudi Arabia, they say give us this assurance from the IMF. Thus, this restructuring becomes very difficult. So where do you start, where do you go first when you have to go to four places.'

Will China facilitate debt repayment to Pakistan? In this difficult time, will China facilitate the repayment of loans to Pakistan? Regarding this, Khurram Hussain says that there is a possibility, but it is a complicated process. 

Khurram Hussain said that "Today Bilawal is saying that we did not talk about debt restructuring with China, he knows that when it goes to China, they will be angry."

He said that because China has been talking to Pakistan about improving the system for a long time, now Pakistan may face criticism from China for talking about restructuring.

However, he said, "But Pakistan will have to go through this difficult phase and go to China, they will impose their conditions, but maybe eventually there will be a waiver in this regard, but it will be a complicated process that will take time." It will take.' 

According to Khurram Hussain, it became Pakistan's lifeline and these loans "not only China should restructure, Paris Club should restructure, but everyone should do it, but everyone is making this matter conditional to each other." 

"So you (Pakistan) will have to go to every door and face humiliation but there is no other option." 

What are the types of loan facilities and what is Debt Swap?

Ek Hota Hai Debt Waiver, that is, the debt should be waived off completely, said Abid Sulhari in detail. One is debt deferment, which means you ask for a grace period in terms of repayment of the loan. 

According to him, 'The third is a debt swap in which the borrower and the lender create a fund and the amount to be repaid goes into this fund. Then the money is spent only for the purpose for which the fund is created. 

For example, if the fund is earmarked for a flood, it will be used only about that, then the lending country or institution can ask you to account for where the money has been invested.

It should be noted that Pakistan has not yet been given the facility of debt repayment by any country in terms of debt swap, so if it is done in the coming days, the conditions will be clear at that time.