Pakistan has formally requested an expansion of its currency swap arrangement with China by an additional 10 billion yuan (approximately $1.4 billion), Finance Minister Muhammad Aurangzeb confirmed during the IMF and World Bank spring meetings in Washington. The country currently holds a 30 billion yuan swap line with China’s central bank. “From our perspective, moving to 40 billion yuan would be an ideal step, and we’ve submitted that request,” Aurangzeb told Reuters. The People’s Bank of China has been actively promoting swap lines with multiple emerging economies, including Argentina and Sri Lanka.

In a parallel move to strengthen financial ties with Beijing, Pakistan is progressing toward issuing its first Panda bond Chinese yuan-denominated debt on China’s domestic bond market. Discussions with key partners such as the Asian Infrastructure Investment Bank (AIIB) and the Asian Development Bank (ADB), who may provide credit enhancements, have been productive, he noted. “We aim to diversify our funding sources, and we’ve made good headway on that front. We’re optimistic about launching the first tranche before the end of this calendar year,” Aurangzeb added.

On the multilateral front, the minister expects the International Monetary Fund (IMF) board to approve, by early May, the recently reached Staff Level Agreement. The agreement includes a $1.3 billion climate resilience loan and the first review of Pakistan’s $7 billion Extended Fund Facility (EFF) bailout program. A favorable board decision would unlock a $1 billion disbursement, which is crucial for maintaining economic stability.

Addressing questions about the recent spike in India-Pakistan tensions following the killing of 26 Indian tourists in Pahalgam, Aurangzeb acknowledged the incident's adverse impact: “It’s certainly not helpful,” he said. The attack, widely believed to be backed by Pakistan-based militants, prompted strong reactions from New Delhi, including the suspension of the Indus Waters Treaty, airspace restrictions, and diplomatic downgrades.

In retaliation, Pakistan closed its airspace to Indian carriers and suspended trade links. Trade between the two neighbors had already dwindled to just $1.2 billion in 2024 due to persistent geopolitical tensions. Looking ahead, Aurangzeb projected economic growth of around 3% for the current fiscal year ending June 2025, and expects growth to rise to between 4–5% in the next fiscal year, with a longer-term target of 6%. ($1 = 7.2864 Chinese yuan renminbi)