Annual interest on Chinese debt reached 36.3 billion

Islamabad: In order to facilitate the payment of debts, the amount of interest owed by China on the currency exchange facility of 4.5 billion dollars has increased by 39%, due to which Pakistan had to pay 36.3 billion rupees in this regard in the last financial year.

The annual financial accounts of the State Bank of Pakistan for the financial year 2021-22 show that Pakistan had to pay Rs 36.3 billion in annual interest for using the Chinese trade finance facility worth $4.5 billion.

Due to this, last year, Pakistan paid 26.1 billion rupees as interest, which means that this amount has increased by 39% in just one year, which is 10.2 billion rupees.

State Bank has utilized the entire aggregate amount of the trade finance facility under the China Pakistan Currency Swap Arrangement, amounting to $4.5 billion or 30 billion yuan.

It should be noted that the bilateral currency swap between State Bank of Pakistan and People’s Bank of China in December 2011 for the promotion of bilateral trade and foreign direct investment, short-term liquidity support and any other purpose determined by the mutual consent of the parties. Agreement (CSA) was concluded.

In fiscal year 2021, the upper limit of this agreement was increased from 20 billion yuan to 30 billion yuan or 4.5 billion dollars for a three-year period.

Finance Minister Ishaq Dar visited Beijing this month and requested the Chinese premier to increase the ceiling of the trade finance facility by another 10 billion yuan or $1.5 billion.

If this request is approved by China, Pakistan will have to pay 50 billion rupees in interest during the current financial year.