Chinese Exim Bank refuses to extend concessional loans

ISLAMABAD: China’s Exim Bank has reportedly expressed its unwillingness to extend concessional loans to Pakistan, citing a limited window and concerns over non-payment or delayed payments to Chinese companies operating Independent Power Producers (IPPs), well-informed sources told Business Recorder.

This message was conveyed by the President of Exim Bank of China during a meeting with Pakistan’s Federal Minister for Planning, Development, and Special Initiatives, Ahsan Iqbal, in Beijing on December 19, 2024.

The meeting aimed to discuss ongoing and future projects and strengthen economic cooperation between Pakistan and China.

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The Minister highlighted recent positive trends in Pakistan’s economy, attributing them to the government’s constructive policies and administrative measures. He also expressed gratitude for the support from the Government of China and the Exim Bank of China in securing the Extended Fund Facility from the IMF. The President of Exim Bank expressed satisfaction over the improvements in Pakistan’s economic situation.

During the meeting held at Exim Bank’s headquarters, discussions focused on concessional financing, the ML-1 project, the Pakistan Satellite Centre (PSC) project, issues with IPPs, and potential collaboration with Exim Bank of Pakistan.

On the issue of concessional financing, the President of Exim Bank of China clearly stated that the Bank’s concessional financing window is limited. She added that with Pakistan’s improving economic conditions, it would be beneficial for the country to explore other financing options. She also noted that the better economic outlook and friendly bilateral relations could attract more Chinese investment to Pakistan.

According to sources, the Minister for Planning, Development, and Special Initiatives emphasised the need to upgrade Pakistan’s aging railway infrastructure through the ML-1 project. He mentioned that a technical team would visit Pakistan soon to evaluate the project and suggested including financing experts from Exim Bank to expedite the appraisal process.

Exim Bank’s management acknowledged the significance of the ML-1 project and assured that the Bank would support the Ministry of Transport of China, which is the lead ministry for this initiative.

Regarding the Pakistan Satellite Centre (PSC) project, the minister highlighted the importance of the project, which is under consideration for revalidation due to non-disbursement of an already approved loan. He requested Exim Bank to finalise the loan processing. Exim Bank’s management noted that while the project is important, it would not yield direct economic benefits for Pakistan and would add to the country’s fiscal burden.

On the issue of IPPs, the President of Exim Bank raised concerns about the non-payment or delayed payments to Chinese companies operating Independent Power Producers (IPPs). She added that, as a financier of these projects, Exim Bank is indirectly affected by these payment delays. Furthermore, delays in obtaining foreign exchange for fuel costs and other expenses are exacerbating the challenges faced by these IPPs.

During discussions on collaboration with Exim Bank of Pakistan, the minister noted that Exim Bank of Pakistan has commenced operations, and both banks could collaborate to enhance the economic impact of their joint initiatives.

Copyright Business Recorder, 2025