China’s Exim Bank has expressed reservations about extending concessional loans to Pakistan, citing a restricted financing window and issues related to delayed payments for Chinese-operated Independent Power Producers (IPPs).
Business Recorder reported, citing sources, that these concerns were passed on by the President of Exim Bank during a meeting with Pakistan’s Federal Minister for Planning Ahsan Iqbal in Beijing on December 19, 2024.
During the meeting at the bank’s headquarters, the President noted Pakistan’s improving economic outlook but emphasized the need for the country to diversify its financing options. She added that the limited concessional financing window required Pakistan to explore alternative solutions, leveraging better economic conditions and strong bilateral ties to attract Chinese investments.
Exim Bank’s president raised significant concerns over delayed payments to Chinese companies operating IPPs in Pakistan, noting that as a financier of these projects, the bank is indirectly affected. She also pointed to foreign exchange delays for fuel costs, exacerbating the operational challenges faced by the IPPs.
The Minister highlighted the urgency of upgrading Pakistan’s aging railway infrastructure through the ML-1 project. A technical team is expected to visit Pakistan soon for project evaluation. The Exim Bank’s management recognised the project’s importance and assured support in collaboration with China’s Ministry of Transport, which oversees the initiative.
The Pakistan Satellite Centre project, delayed due to the non-disbursement of an approved loan, was also discussed. The Minister urged Exim Bank to expedite loan processing. However, the bank raised concerns about the project’s lack of direct economic benefits, which could further strain Pakistan’s fiscal position.
Despite concerns, Exim Bank’s management expressed satisfaction with Pakistan’s recent economic improvements and reaffirmed its commitment to facilitating discussions with relevant Chinese ministries.
However, the bank urged Pakistan to address the payment challenges and fiscal concerns to ensure smoother collaboration in future projects.
The planning minister proposed enhanced collaboration between the Exim Bank of China and the recently operational Exim Bank of Pakistan to strengthen the economic impact of joint initiatives.
