Pakistan is likely to borrow another $750 million as a short-term foreign commercial loan from China, possibly to pay back the Eurobond debt incurred during the rule of General (retired) Pervez Musharraf. The Express Tribune quoted Ministry of Finance sources as saying that the government is considering taking another commercial loan to return $750 million Eurobond debt due to the relatively low cost of borrowing from foreign commercial banks.
The Musharraf government had issued 10-year bonds at a 6.875% interest rate in 2007, which will mature on May 24 this year.
Sources said this could be the Pakistan’s third major borrowing from China in the past six months.Chinese banks had earlier given USD 1.3 billion to support the balance of payments situation in Pakistan.
Sources said that China was offering these loans at around 3.3 percent interest rate. Pakistan’s previous foreign commercial borrowings were at around 4.7percent interest rate.
Pakistan has started borrowings to pay back its past borrowings and China’s loans to Pakistan are growing at a rapid pace than its investment under the China-Pakistan Economic Corridor.
Pakistan has in total obtained $2.1 billion loans from China from September to February 2016-17.