China urges all to play 'constructive role in Pakistan’s economic stability efforts'

The Chinese government has urged creditors to play a constructive role in Pakistan’s economic and economic stability efforts.

Speaking at a China foreign ministry media briefing in Beijing on Thursday, spokesperson Mao Ning, when questioned whether Chinese debt to Pakistan will be rolled over, said China and Pakistan were “all-weather strategic partners and solid friends”.

“China has been in close economic and financial cooperation with Pakistan and supported its efforts to maintain economic stability, improve lives and achieve self-generated development,” said the spokesperson. 

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She highlighted that “the radical financial and monetary policies of a certain developed country” and their “serious spillover effects” are the primary cause of the financial difficulties experienced by countries like Pakistan.

She noted that “Western-dominated commercial creditors and multilateral financial institutions account for the lion’s share of developing countries’ debt”, adding that “China calls on concerted efforts from all parties to play a constructive role in Pakistan’s economic and social stability efforts.”

The development comes as Pakistan remains in talks with the International Monetary Fund (IMF), for the resumption of the stalled Extended Fund Facility (EFF) programme, which is crucial for the South Asian’s broken economy faced with a balance-of-payment crisis.

The sides have been negotiating a policy framework since the start of last month to agree on measures to bridge the fiscal deficit ahead of an annual budget around June.

A staff-level agreement (SLA) is yet to be signed, which finance minister Ishaq Dar said on Thursday should be done by next week.

If negotiations succeed, the IMF will issue over $1 billion to Pakistan, which is critical to unlock other bilateral and multilateral funding.

Last week, Pakistan received inflows amounting to $700 million from China to build its sliding foreign exchange reserves.

On the back of this loan, State Bank of Pakistan-held foreign exchange reserves increased $556mn and stood at $3.81bn, data released on Thursday showed.