China’s Exim Bank has reportedly indicated it will not extend concessional loans to Pakistan due to a limited timeframe and worries over delayed payments to Chinese companies involved with Independent Power Producers (IPPs). This information came forth during a meeting between the President of Exim Bank and Pakistan’s Federal Minister for Planning, Development, and Special Initiatives, Ahsan Iqbal, in Beijing on December 19, 2024.
The discussion aimed to enhance economic cooperation and address current and upcoming projects. Minister Iqbal highlighted positive trends in Pakistan’s economy, linking them to effective government policies and thanking China for its support, particularly in securing the Extended Fund Facility from the IMF. The Exim Bank President acknowledged Pakistan’s improving economic landscape.
At the meeting, participants focused on concessional financing, the ML-1 railway project, the Pakistan Satellite Centre (PSC) initiative, and issues regarding IPPs, as well as potential collaboration between Exim Bank and Pakistan’s Exim Bank.
The Exim Bank President emphasized that the concessional financing opportunities are limited. With the improvements in Pakistan’s economic conditions, she encouraged the exploration of alternative financing avenues. She also suggested that enhanced bilateral relations could potentially attract more Chinese investment into Pakistan.
The Minister stressed the urgency of upgrading Pakistan’s outdated railway infrastructure through the ML-1 project and indicated that a technical team would assess the project soon, proposing the inclusion of financing experts from Exim Bank to facilitate the process.
While Exim Bank recognized the significance of the ML-1 initiative, discussions revealed concerns regarding the Pakistan Satellite Centre project, which awaits revalidation due to a lack of fund disbursement. The minister urged the bank to expedite loan processing for this project, despite its lack of direct economic benefits and the potential fiscal burden it may impose.
The President of Exim Bank also raised issues relating to payment delays affecting Chinese companies managing IPPs, stating these delays have indirect repercussions on the bank due to their role as project financiers. Moreover, complications in securing foreign exchange for fuel costs have intensified the difficulties faced by these IPPs.
In discussions on collaboration with Exim Bank of Pakistan, Minister Iqbal noted the commencement of operations at Exim Bank of Pakistan and expressed optimism for joint initiatives that could significantly impact the economy.