Re-profiling Chinese debt

August 2, 2024

ISLAMABAD – THERE was one line in Finance Minister Muhammad Aurangzeb’s remarks last Sunday that caught my eye. In his press conference on that day, he announced that Islamabad is seeking the re-profiling of $27 billion worth of debt owed to China, Saudi Arabia and the UAE, as per a news report.

He did not bring up the subject of debt re-profiling himself, preferring to focus his remarks on less sensitive matters such as how the tax burden should and will have to be borne. But in the question and answer session, multiple reporters asked pointed questions about his visit to China, and he slowly divulged the contents of his discussions there.

He landed in China one week ago, and on the day he arrived Reuters ran a report saying he was there to seek debt relief. The only official comment at the time was a finance ministry statement asserting that the minister would inform the Chinese side about Pakistan’s reform agenda, the tax- and energy-related steps it was going to take under the IMF programme whose staff-level agreement was signed a few weeks ago.

But on his return, it was confirmed that the matter was raised, and a few details trickled out. When he was asked specifically about the amount of debt he is asking to be re-profiled, he demurred at first, but then, when pressed, said “it is a manageable amount” and “let me tell you who the partners are; they are Saudi Arabia, UAE and China”.

In time, we learned the amount is $27bn; the figure was carried in the headlines the next day. This comes more than a month after Prime Minister Shehbaz Sharif visited China and met President Xi Jinping himself, along with a large number of other officials. They had disguised that visit as seeking some sort of revival of