ISLAMABAD According to two official sources, Finance Minister Muhammad Aurangzeb traveled to Beijing on Thursday to hold discussions about the International Monetary Fund’s recommended structural changes as well as debt relief for the power industry.
They said that he met with his Chinese counterpart and is heading a mission that includes Power Minister Awais Leghari to explore a number of initiatives, one of which is to reclassify roughly $15 billion in debt from the energy sector.
Pakistan’s bonds fell as the conference went on; by 1415 GMT, Tradeweb data shows that the 2036 maturity had dropped 1.73 cents to bid at 73.05 cents on the dollar, its lowest level since April.
The border-sharing nations have long been allies, and in the past, Pakistan has been able to meet its external finance demands thanks to rollovers or payouts on loans from China.
This month, the IMF approved a $7 billion rescue package for the deeply indebted economies of South Asia, but expressed alarm about the high rates of power theft and distribution losses that lead to debt accumulation along the entire supply chain.
According to Leghari, the government is putting structural changes into place to cut “circular debt,” or public liabilities that accumulate in the power sector as a result of subsidies and unpaid bills, by 100 billion Pakistani rupees ($360 million) year.
He stated on X on Thursday that he and the finance minister had given Chinese Finance Minister Lan Fo’an an update on Pakistan’s “systemic efforts to introduce tax and energy reforms.”
According to a statement from Pakistan’s finance ministry, Aurangzeb briefed the Chinese side on the plan for economic reform, initiatives to boost tax revenue production, and the reform of state-owned enterprises and energy. He noted that the agreement between Pakistan and the IMF was a significant facilitator of carrying out the reform agenda.
Messages seeking response were not answered by the Chinese Ministry of Finance.
In comments with Reuters last week, the ministers of finance and power stated that they will talk about the reforms to the electricity industry during their travel to Beijing, although they did not say when.
A previous IMF bailout obtained last year that included increasing power bills as part of the financial arrangement that ended in April had an impact on households in the poor and middle classes.
China has established energy projects in Pakistan valued at more than $20 billion.
