Pakistan sought to change the terms of a $27 billion loan from three friendly countries, this is the reason

Cash-strapped Pakistan has sought renegotiation of the terms of over $27 billion of loans and various liabilities with China and two other friendly countries to get an IMF relief package.

Last month, the Washington-based International Monetary Fund announced that it had inked a staff-level agreement with Islamabad, promising a seven-billion-dollar loan over 37 months. But this signing also came with tough conditions, which must be met by Islamabad before the final board of the fund gives its approval for the loan.

His Excellency the Finance Minister, Muhammad Aurangzeb, told the media Sunday that talks with China, Saudia Arabia, and the UAE were underway for re-profiling of the $27 billion debt after returning from Beijing.

Aurangzeb told that: 'We have already asked the three to extend its annual loan portfolio of over $12 billion for three to five years so that we can get the approval of the IMF board. We expect this approval next month'. Pakistan has asked for a maturity extension of its loans — USD 5 billion from China, USD 4 billion from Saudi Arabia, and USD 3 billion from the UAE — by at least three years.

Aurangzeb said the Chinese side acknowledged Pakistan's foreign exchange difficulties and wanted to help in re-profiling payments for new business ventures and the energy sector, besides playing its role in supporting Pakistan's case at the IMF board as one of the key stakeholders.

Aurangzeb said the issue of power sector repayments was initially raised by Prime Minister Shahbaz Sharif with Chinese President Xi Jinping during his visit to Beijing and was followed by formal letters to Prime Minister Li Keqiang. However, the minister clarified that Pakistan is seeking re-profiling of payments and not loan waivers or interest rate cuts.