Prime Minister Shehbaz Sharif on Friday said that he had written a letter to the Chinese government requesting debt reprofiling for Pakistan in an apparent bid to secure the International Monetary Fund’s approval for a $7 billion economic bailout by next month.

Earlier this week, a Dawn report confirmed that Pakistan had sought the reprofiling of more than $27 billion in debt and liabilities with friendly nations — China, Saudi Arabia, and the UAE — to secure a 37-month International Monetary Fund (IMF) bailout package and ease energy sector foreign exchange outflows and consumer tariffs.

This is on top of Islamabad’s request to Beijing to convert imported coal-based projects to local coal and reprofile more than $15bn in energy sector liabilities to create fiscal space amid difficulties in timely repayments.

“I have written a letter to China, it’s a matter of public domain now, for [debt] reprofiling,” the PM said while addressing a meeting of the federal cabinet before the National Assembly (NA) session today.

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According to the World Bank, debt reprofiling refers to “modifications of the aggregate schedule of future country repayments through refinancing, debt substitution, or renegotiations.”

The process can help a country if it’s facing simultaneous maturity of multiple loans or experiencing exposure issues, such as in the currency composition of its liabilities. It can also help a country mitigate currency risk, which frequently exacerbates debt sustainability issues.

PM Shehbaz informed members of the cabinet that Chinese President Xi Jinping had shown “keen interest in his idea” of using local coal to cut down imports.

“I told the president that Thar coal could help the country cut down on imports and save $1 billion in foreign exchange,” the PM said.

He also pointed out that Finance Minister Muhammad Aurangzeb had “very good meetings” in China during his recent visit, noting that efforts were underway to implement structural reforms for reducing circular debt.

“Whether consumers are industrial or household, the government of Pakistan is fully struggling day and night to extend relief,” he said, “This is the joint voice of all parties and the nation.”

Earlier, he had commended friendly ties with China.

“Nobody was ready to invest in our energy sector at the time, but China stepped in and began CPEC, it was the only country to intervene,” he had said, crediting ex-premier and PML-N President Nawaz Sharif’s government for signing the agreements for the infrastructure.

Moreover, he said that the medium-term measures for the government included addressing loans and capacity charges.

Pakistan to exempt Chinese citizens from visa fees

According to state-owned Radio Pakistan, PM Shehbaz, while talking to a high-level Chinese delegation, informed them of the federal cabinet’s decision to exempt Chinese citizens from visa fees with effect from August 14.

The premier also said that joint ventures between the two countries in the fields of mines and minerals, information technology, export zones, industrial zones, and relocation of industry from China will further strengthen the local economy.