ISLAMABAD: Pakistan’s Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb has lauded the positive response from China to Pakistan’s request to extend debt repayment periods for projects under the Belt and Road Initiative (BRI).
In an interview with Western media, on the sidelines of the annual meetings of the International Monetary Fund (IMF) and World Bank, the Finance Minister said that Pakistan was looking to increase the maturities of debt taken for power plants to create enough space to bring down the electricity prices.
“We have just started that discussion and the response is encouraging,” Aurangzeb said. “These are early days in terms of those negotiations.”
Aurangzeb stressed the need for Pakistan to maintain fiscal discipline and enhance the tax-to-GDP ratio from below 10% to 13.5%.
Pakistan has been a regular borrower, engaging in 25 programs with the IMF. The minister said that the government will start negotiations with the IMF on obtaining additional financing through its climate resiliency fund.
He said that Pakistan will target areas such as agriculture and retail, which have opposed taxation previously. The provinces will move forward with legislation pertaining to agriculture by January, to start tax collection by July.
Pakistan has been a major destination for China’s Belt and Road Initiative, which has provided loans to developing nations and helped Pakistan overcome decades-long electricity blackout issues.
It is now trying to extend the maturity of debt for nine power projects constructed by Chinese companies.
However, Pakistan’s central bank has cut its benchmark interest rate for three consecutive meetings by 450 basis points, reducing it to 17.5% from a record 22%.
