Pakistan faces crunch in paying loans to Chinese companies

Chinese banks have denied Pakistan a new loan before re-scheduling previous payables with the country's Independent Power Producers (IPPs).

The decision of the Chinese bank came at a time when Pakistan was working to unlock a fresh bailout programme, and the IMF sought assurance from the country not to return IPPs payment from the global lender’s loan.

The fund also asked Pakistan to resolve the IPPs' matter "as soon as possible" and reschedule the payment process for five years.

On the other hand, IPPs denied any table talk with Pakistan before the clearance of dues. 

According to the sources, Premier Shehbaz Sharif and Finance Minister Muhammad Aurangzeb were seeking relaxation from Chinese commercial banks and industrial banks in harsh conditions for a $600 million loan.

Apart from this, Chinese banks were demanding fix 8 percent interest rate for a fresh loan.

Islamabad has been negotiating with China since 2023 for a loan, while both brotherly country's banks asked to schedule for repaying dues to IPPs before the new program.

It should be noted that currently, Pakistan has to pay about Rs550 billion to Chinese power plants.