Pakistan has launched discussions on reprofiling its debt to China’s power sector, Finance Minister Muhammad Aurangzeb announced at a press conference on Sunday. This move is part of broader negotiations involving structural reforms suggested by the International Monetary Fund (IMF).
Aurangzeb clarified that the process involves reprofiling rather than restructuring, meaning that while the debt amount remains unchanged, the repayment period will be extended. Pakistan plans to address the reprofiling on a project-by-project basis and is considering appointing a local advisor in China to assist with the process.
The ongoing discussions come as Pakistan engages with Saudi Arabia, the United Arab Emirates, and China to meet its financing needs under the IMF programme, which requires board-level approval. The IMF recently approved a $7 billion bailout for Pakistan but raised concerns about power theft and distribution losses exacerbating the sector’s debt.
Aurangzeb also outlined the government’s broader economic strategies, including reforms at the Federal Board of Revenue (FBR) aimed at increasing revenue collection. Weekly meetings chaired by Prime Minister Shehbaz Sharif are focused on reducing the burden on lower-income groups. The government has expressed gratitude to provincial Chief Ministers for their support of tax reforms and hopes for new legislation to include the agricultural sector in the tax regime.
To facilitate business and improve tax collection, the government has refunded Rs68 billion in claims and identified a tax potential of Rs600 billion, with Rs1 billion already recovered. Efforts to address customs misclassification have revealed a potential tax value of Rs50 to 200 billion.
Aurangzeb urged the media to campaign against under-taxed and untaxed entities and emphasized the simplification of tax processes to ease compliance for businesses and salaried individuals. The government is also considering rightsizing several ministries, with final decisions pending from Prime Minister Shehbaz Sharif.
