Pakistan has requested a $1.4 billion increase in its currency swap line with China, Pakistan’s finance minister Muhammad Aurangzeb said. Speaking to Reuters during the International Monetary Fund and World Bank spring meetings in Washington, Aurangzeb said, “From our perspective, getting to 40 billion renminbi would be a good place to move towards … we just put in that request.” Pakistan currently has a 30-billion-yuan swap arrangement in place.
Aurangzeb added that the country expects to launch its first Panda bond, debt issued on China’s domestic bond market, by the end of this year, with discussions involving the Asian Infrastructure Investment Bank and the Asian Development Bank progressing well. “We want to diversify our lending base, and we have made some good progress around that – we are hoping that during this calendar year we can do an initial print,” he said.
The request to Beijing comes as Pakistan faces mounting pressure from New Delhi. Tensions have surged following the Pahalgam terror attack in Kashmir, which left 26 tourists dead and led to a sharp deterioration in India-Pakistan ties. The National Investigation Agency (NIA) is investigating the attack, intensifying searches at the site, and the Indian Army has launched multiple operations in the region. In response, India suspended the 1960 Indus Water Treaty and closed the Attari Integrated Check Post.
The total trade between the two nuclear-armed neighbours fell to just $1.2 billion last year. A report from the Global Trade Research Initiative (GTRI) revealed that Indian goods worth over $10 billion still reach Pakistan each year via third countries like the UAE, Singapore and Sri Lanka. Goods are stored in bonded warehouses where documents are modified to show different countries of origin before being shipped to Pakistan, bypassing direct trade restrictions. “While this transshipment model isn’t always illegal, it sits in a grey zone,” said GTRI founder Ajay Srivastava.
Direct trade between the two nations had already plummeted after the Pulwama terror attack in 2019, when India withdrew Pakistan’s Most Favoured Nation status and imposed a 200 percent import duty on goods from Pakistan.
Asked about the economic fallout from the rising tensions, Aurangzeb downplayed concerns, stating that it would have limited impact. “Trade flows between the two countries had already fallen off and totalled just $1.2 billion last year,” he said.
