Pakistan seeks $1.4 Billion expansion of currency Swap Line with China
Pakistan has formally requested China to increase their bilateral currency swap agreement by 10 billion yuan ($1.4 billion), Finance Minister Muhammad Aurangzeb announced
WASHINGTON, April 27- Pakistan has formally requested China to increase their bilateral currency swap agreement by 10 billion yuan ($1.4 billion), Finance Minister Muhammad Aurangzeb announced on Saturday, a move that would bolster the South Asian nation’s foreign exchange reserves.
Speaking to media persons on the sidelines of the IMF and World Bank spring meetings, Aurangzeb revealed Pakistan aims to expand the existing 30 billion yuan swap line to 40 billion yuan. “We’ve submitted our request to Chinese authorities,” the minister said. “Strengthening this financial mechanism is crucial for our economic stability.”
The proposed expansion comes as Pakistan prepares to enter China’s domestic bond market with its inaugural Panda bond issuance later this year. Aurangzeb confirmed constructive discussions with the Asian Infrastructure Investment Bank and Asian Development Bank regarding credit enhancements for the yuan-denominated offering.
“We’re diversifying our financing options and making good progress,” Aurangzeb noted. “The Panda bond debut remains on track for 2025.”
The finance minister also expressed confidence about Pakistan’s ongoing engagement with the International Monetary Fund, anticipating board approval in early May for a 1.3 billion climate resilience program and the first review of its 7 billion extended fund facility. Successful completion would trigger an immediate $1 billion disbursement.
However, Aurangzeb acknowledged fresh economic headwinds from deteriorating relations with neighboring India following recent border tensions. The nuclear-armed rivals have imposed reciprocal measures including airspace closures and trade suspensions, with India additionally halting implementation of the 1960 Indus Waters Treaty.
Bilateral trade between the neighbors has already plummeted to just $1.2 billion annually amid longstanding disputes. “The current tensions certainly won’t help economic recovery,” Aurangzeb conceded.
Pakistan’s economy is projected to grow 3% in the current fiscal year ending June 2025, with the government targeting 4-5% expansion next year and 6% thereafter. The expanded currency swap line with China and new Panda bond program form key components of Islamabad’s strategy to stabilize its financial position.
($1 = 7.2864 Chinese yuan renminbi)
