Finance

Russia's central bank on Thursday said it planned to set a surcharge for banks when issuing new loans to large firms with a high debt burden, as the regulator looks to limit credit risks for Russian companies contending with interest rates at 21%.

[...]

Russian Railways, a key cog in Russia's industrial machine, is one of several firms planning to reduce investments next year. The state-owned monopoly expects its interest payment costs to hit $7 billion next year, suggesting a rise of around $4 billion, a company document seen by Reuters showed last week.

The central bank said the measures would apply to companies with debt over 100 billion roubles ($987 million), an interest coverage ratio of less than 3% and whose consolidated debt exceeds 2% of the Russian banking sector's capital.

It did not specify how much the surcharge would be.

[At the time of the publication of this article on 21 November, $1 stood at 101.2955 roubles.]

If former president and Republican nominee Donald Trump is elected next week, economists are betting that inflation will go up. Research firm Capital Economics plans to actually raise its interest-rate forecast in such a scenario because its economist Thomas Ryan suspects the Federal Reserve’s reaction will be to pull back on slashing rates.

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We’re a little less than a week away from the presidential election, and the housing world is still at a standstill. The two candidates have plans, or concepts of plans, for housing. But inflation plays a key role: It can push prices higher even while real estate serves as a hedge against it. The Consumer Price Index rose just 2.4% in September from a year earlier, and that’s very close to the Fed’s target. Not to mention, the central bank entered into a cutting cycle that same month, slashing its key interest rate by 50 basis points. So you might think the worst is behind us, but it might not be.

In June, 16 Nobel Prize–winning economists signed a letter expressing their concern that Trump’s proposals could reignite inflation. Earlier this month, 68% of economists surveyed [...] said inflation would likely be higher under a Trump presidency. On the other hand, 12% said the same for a Kamala Harris presidency.

[....]

That isn’t to say everything would be perfect if Harris were president—it won’t be, and housing will still be pretty stuck; maybe there’ll be a small recovery. Mortgage rates might come down a bit too. However, the expectation of another Trump presidency is already taking effect, and may only worsen if he is elected.

[...]

cross-posted from: https://feddit.org/post/4321125

Russian Central Bank Governor Elvira Nabiullinawarned comments, made to a group of State Duma lawmakers, come a week after the Central Bank hiked its key rate to a record-high 21%, taking it even further than the emergency rate of 20% initially introduced after the February 2022 invasion of Ukraine.

“With high inflation, economic growth cannot be sustainable,” the Central Bank head told Russian lawmakers. “It’s a dangerous illusion to think that increased inflation can be reliably kept within a certain zone.”

“That’s why we’re not planning to take any shortcuts as we move toward our 4% target,” she added, defending the regulator’s tight monetary policy as an “inevitable reaction to what’s happening in the economy.”

[...]

Seasonally adjusted price growth in September rose to 9.8% year-on-year from 7.5% in August. Core inflation, meanwhile, increased to 9.1% from 7.7% over the same period.

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Russia has faced volatile prices since President Vladimir Putin sent troops into Ukraine in February 2022, triggering a barrage of Western sanctions and strict countermeasures in a bid to stabilize the economy. So, too, has defense spending soared as Moscow ramps up arms production for the war in Ukraine.

Russia’s draft budget for 2025, passed by lawmakers in its first reading last week, allocates around one-third of total state spending — or 6.3% of GDP — to the military, a figure unprecedented since the days of the Cold War.

Given that so much of the current spending is driven by the state, which is less responsive to higher borrowing costs, analysts fear that raising interest rates may not be an effective measure against inflation.

[...]

Analysts have cautioned that Russia may be entering a period of “inflation without growth,” while also warning the economy is inching closer toward stagflation — when the economy grows slowly and prices shoot up.

cross-posted from: https://feddit.org/post/4262252

A combination of good high-speed internet coverage, high digital literacy rates, large rural populations and fast-growing fintech industries had put the Nordic neighbours on a fast track to a future without cash.

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But Russia’s invasion of Ukraine in 2022 and a subsequent rise in cross-border hybrid warfare and cyber-attacks blamed on pro-Russia groups have prompted a rethink.

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The Swedish government has since completely overhauled its defence and preparedness strategy, joining Nato, starting a new form of national service and reactivating its psychological defence agency to combat disinformation from Russia and other adversaries. Norway has tightened controls on its previously porous border with Russia.

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[Norway's] justice and public security ministry said it “recommends everyone keep some cash on hand due to the vulnerabilities of digital payment solutions to cyber-attacks”. It said the government took preparedness seriously “given the increasing global instability with war, digital threats, and climate change. As a result, they’ve ensured that the right to pay with cash is strengthened”.

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Biased media coverage imposes on African nations a significant cost burden, particularly during electoral periods, ultimately deterring foreign direct investment (FDI) in a continent known for its low default rates and high returns in strategic sectors, research by the 'Africa No Filter' and 'Africa Practice' finds.

The study used academic estimates indicating that media sentiment can influence borrowing interest rates by up to 10%, with a 10% improvement leading to a 1% decrease in rates.

• Negative narratives dominate the discourse around African elections compared to non-African countries with similar risk profiles. Fir example, 88% of media articles about Kenya during its election period were reported as negative, compared to only 48% for Malaysia, which affects Kenya's ability to attract foreign investments​.
• African countries consistently face higher bond yields, with Egypt having an average bond yield of 15%, compared to Thailand’s 2.5%
• Improved media sentiment could reduce borrowing interest rates by up to 1%, translating to potential savings of $4.2 billion annually across the continent. This amount could fund the education of over 12 million children, provide immunizations for more than 73 million children, or ensure clean drinking water for two-thirds of Nigeria’s population.

The report emphasises that while Eurobond debt servicing constitutes only 6% of Africa’s financing portfolio, further exploration into other financial inflows is essential to fully understand the extent of the ‘prejudice premium’ affecting African nations.

The findings underline the need for a recalibration of global media representations of Africa, urging for more accurate portrayals that reflect the continent’s diverse realities. The study serves as a clarion call for stakeholders in both media and finance to work collaboratively towards fostering a more equitable representation of Africa. By addressing these biases, substantial investment can be unlocked.

Here are detailed numbers by the International Monetary Fund (IMF)

Public debt levels have ticked up again in the United States, the EU and China in 2024, according to estimates by the International Monetary Fund (IMF). This year, U.S. government debt is expected to reach 121 percent of GDP, compared to 90.1 percent of GDP in China and 82.7 percent of GDP in the EU.

Looking back over recent years, public debt rose to around 132 percent of GDP in the first year of the coronavirus pandemic in the U.S., marking an increase of almost 24 percentage points from 2019. The increase in debt in the European Union and China was significantly lower during this period.

However, the debt ratio in the U.S. also fell again relatively sharply in 2021, down 7.3 percentage points compared to 2020. By contrast, the Chinese government's debt has continued to rise steadily between 2020 and 2024. While China has fueled growth with significant, credit-financed investments, this economic policy is also reflected in the country’s rising national deficit.

National debt is expressed in absolute terms in the national currency. The debt ratio/government debt ratio is the ratio of government debt to gross domestic product (GDP). If government expenditure exceeds government revenue, this is referred to as a budget deficit (as opposed to budget surplus).

cross-posted from: https://feddit.org/post/4036901

Russia expects the local subsidiaries of European banks Raiffeisen Bank International (RBI) and UniCredit to participate in the mass launch of the digital rouble in July 2025 or face potential fines.

Austria's Raiffeisen Bank International (RBI) and Italy's UniCredit are two of Russia's 13 systemically important banks but they are also under pressure from the European Central Bank to cut their exposure to Russia.

Russia has been piloting a digital rouble and plans to begin mass implementation on July 1, 2025. Under the pilot scheme, a select group of individuals and companies has been allowed to open digital wallets and make purchases and transfers with digital roubles. Bank of Russia Governor Elvira Nabiullina said the full rollout next year would be voluntary for individuals, but not for systemically important lenders.

[...]

Meanwhile, the Russian government is signaling that it will block any attempt by lenders including Raiffeisen Bank International AG and UniCredit SpA to sell local units to any buyer that risks being sanctioned, according to people familiar with the matter.

That effectively rules out a Russian buyer, and given the opposition by Western governments to any outside bidder stepping in, makes a sale next to impossible. Abu Dhabi’s Mubadala Investment Co. abandoned a potential purchase of UniCredit’s Russian operations last year on the basis that the US government would oppose it, people familiar with the matter said.

Raiffeisen and UniCredit have been seeking a way out of their entanglement in the country since the invasion of Ukraine over two years ago. The Western banks, two of the largest left with operations in Russia, are seen by the government of President Vladimir Putin as vital conduits for foreign payments, one of the people said.

Archived version

Human rights concerns continue to dog China's fast fashion retailer Shein‘s initial public offering (IPO) in the UK

If Liam Byrne—a British Labour Party politician who leads parliament’s business and trade committee—gets his way, Shein might need to redirect its planned IPO float to Hong Kong or its home base in Singapore. He is calling for the U.K. government to ban imports made in the Xinjiang region in China, according to the Financial Times. That kind of legislative change will result in greater intensive scrutiny in the supply chain, and ultimately on producers such as Shein over alleged use of forced labor.

Xinjiang is the Chinese region with links to the exploitation of Uyghurs and other Muslim ethnic groups via forced labor. The evidence of crimes against humanity are widely documented.

[...]

Even those connected to the fast-fashion firm end up getting pulled into Shein controversies.

Last month, Italy launched a greenwashing probe into Shein. The Italian antitrust watchdog is probing Infinite Styles Services Co., a Dublin-based operation that manages Shein’s online presence. The probe’s focus is over the possibility of misleading sustainability claims connected with Shein’s clothing.

Last month, Italy launched a greenwashing probe into Shein. The Italian antitrust watchdog is probing Infinite Styles Services Co., a Dublin-based operation that manages Shein’s online presence. The probe’s focus is over the possibility of misleading sustainability claims connected with Shein’s clothing.

And in August, David Schwimmer, the leader of the London Stock Exchange Group, found himself pushing back on allegations that the Exchange had lowered its standards to court Shein so it could switch course from the U.S. to the U.K. for its flotation.

[...]

Shein initially planned to file its IPO in the U.S., but drew scrutiny from Washington lawmakers, who urged the Securities and Exchange Commission to block the firm due to concerns over ties to the Chinese government and alleged use of forced labor in its supply chain.

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[Given the scrutiny in the UK], the most likely scenario could be a listing on the Hong Kong Stock Exchange.

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But how a Hong Kong listing would fare also remains a big question mark. Hong Kong isn’t exactly the go-to choice for companies aiming to go public. Exchanges elsewhere, such as the U.S. or London, are seen as more active, and therefore get to attract more investors.

Archived link

On Sept. 13, the Central Bank of Russia raised its key interest rate to 19% and warned of further hikes to come. The Central Bank claims the move was necessary to combat inflation, which it attributes to an alleged excessive rise in domestic demand.

However, there is an alternative viewpoint. According to economist Valery Kizilov, it was the Central Bank itself that fueled inflation by unjustifiably expanding the monetary base for years while simultaneously encouraging a credit boom. Russia has grown accustomed to living with an inflation rate of close to 10%, negligible real growth, and interest rates on loans exceeding 25% per year.

Breaking away from this course is difficult, writes Kizilov, and those caught up in the euphoria tend to ignore the risks and disregard the future.

The People's Bank of China (PBoC) lowered the reserve requirement ratio (RRR) for banks by 50bps, the second reduction this year aimed at bolstering a stuttering economy. The change, which takes effect today, Sept. 27, was signaled earlier in the week by Governor Pan Gongsheng, bringing the weighted average RRR to 6.6%.

This move will free up about CNY 1 trillion in new lending, with the central bank leaving room for another cut this year.

Additionally, the PBoC trimmed the 7-day reverse repo rate by 20bps to 1.5%. This rate is used to determine the nation's key lending rates. It also stated interest rates for 14-day reverse repos, as well as temporary repos and reverse repos, will continue to be adjusted in line with changes to the 7-day reverse repo rate. China has ramped up the rollout of policy initiatives this week, with its top decision-making body, the Politburo, pledging to introduce further fiscal and monetary support measures to prevent further deterioration of the econom

cross-posted from: https://feddit.org/post/3202701

China’s problem is essentially that it has too much debt.

The main role of debt is to bring forward demand from the future. [...] China’s stimulus has kept on increasing since 2008, until it peaked with the end of the pandemic.

Now China risks entering a classic ‘debt trap’ where new loans are taken out to repay existing debt – not to create new demand. In other words, the debt is no longer being used to generate growth. In turn, this risks generating a downward spiral.

[...]

The underlying problem, of course, is China’s massive housing bubble. It was probably the largest ever seen. And it has been bursting for some time, with home sales slumping, as the Bloomberg chart shows.

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China needs to urgently boost [domestic] consumption and downsize manufacturing.

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• Housing is currently unaffordable for most people
• The real estate market is an outsize risk for the economy – it is 29% of GDP, and 70% of China’s urban wealth
• Given China’s ageing population, it seems likely [that housing sales] volume could drop at least another 20% before the market bottoms
• That will mean China will need to import a lot less oil, metals, plastics and everything else connected to the bubble.

cross-posted from: https://feddit.org/post/2778752

Demand for new Estonian government bonds totalled EUR 821mn, which was four times more than the EUR 200mn offered, the Ministry of Finance announced, ERR reports.

Altogether 28 professional investors and 7,304 retail investors participated in the public bond offering. Retail investors subscribed to bonds worth EUR 29mn and will receive 100% of the amount subscribed to. Estonian professional investors will receive 26% and international investors 13% on average.

Trading in Estonian bonds will begin on the Nasdaq Tallinn stock exchange on 17 September 2024. The bonds will mature on 16 September 2026, yielding a fixed annual interest rate of 3.3%.

China's shadow bank Zhongzhi exploited risky and potentially illegal practices before its collapse last year

• Zhongzhi units engaged in potentially illegal practices before Chinese shadow bank's collapse, records show
• Practices involved guaranteeing returns; using new investor funds to pay returns on existing wealth management products
• Chinese regulators had prohibited capital pool business and guaranteeing of returns to prevent financial instability
• Zhongzhi and relevant units did not respond to Reuters queries about such practices

Zhongzhi Enterprise Group, a former leader of China's shadow banking sector that declared insolvency last year, used aggressive and potentially illegal sales practices to sustain its operations as it lurched toward collapse, according to new records.

China's years-long property boom had propelled Beijing-headquartered Zhongzhi to the top of the country's $18 trillion asset-management industry and made it a key player in a shadow banking sector the size of the French economy. Asset managers such as Zhongzhi sell wealth-management products to investors. The proceeds are then channeled by licensed trust firms like its Zhongrong unit to developers and other companies that cannot tap bank funding directly because of poor creditworthiness or other reasons.

Previously unreported details show that about a year before its financial troubles burst into the open, Zhongzhi units were paying returns to existing investors in wealth-management products by using funds from new investors, and promising individual investors lucrative returns that belied the group's exposure to a deepening property crisis.

China's trust firms are known as shadow banks because they operate outside many of the rules that govern commercial lenders. But China's top banking regulator in 2018 specified that financial institutions including shadow banks and asset managers should not set up capital pools, to prevent them from using money from new sales to cover returns on existing wealth-management products, nor should they guarantee returns on wealth-management products.

cross-posted from: https://feddit.org/post/2595239

Major Russian banks have called on the central bank to take action to counter a yuan liquidity deficit, which has led to the rouble tumbling to its lowest level since April against the Chinese currency and driven yuan swap rates into triple digits.

The rouble fell by almost 5% against the yuan on Sept. 4 on the Moscow Stock Exchange (MOEX) after the finance ministry's plans for forex interventions implied that the central bank's daily yuan sales would plunge in the coming month to the equivalent of $200 million.

The central bank had been selling $7.3 billion worth of yuan per day during the past month. The plunge coincided with oil giant Rosneft's 15 billion yuan bond placement, which also sapped liquidity from the market.

"We cannot lend in yuan because we have nothing to cover our foreign currency positions with," said Sberbank CEO German Gref, stressing that the central bank needed to participate more actively in the market. The yuan has become the most traded foreign currency on MOEX after Western sanctions halted exchange trade in dollars and euros, with many banks developing yuan-denominated products for their clients. Yuan liquidity is mainly provided by the central bank through daily sales and one-day yuan swaps, as well as through currency sales by exporting companies.

Chinese banks in Russia, meanwhile, are avoiding currency trading for fear of secondary Western sanctions.

Vanke had a short-term refinancing gap of about 12 billion yuan ($1.69 billion) at the end of June due to a spike in long-term debt within a year, according to Bloomberg calculations based on company data. That’s the first time Vanke’s cash balance has failed to cover interest-bearing debt maturing in less than a year since at least 2014.

As a bellwether for China’s real estate crisis, Vanke’s debt troubles underscore how even the highest quality developers have been ensnared by the unprecedented property downturn. While it’s managed to avoid a default so far, Vanke’s connections with the nation’s financial and government-backed entities means its distress could eclipse the turmoil wreaked by defaults at rivals China Evergrande Group and Country Garden Holdings Co.

[...]

China’s housing rescue package in May is losing steam as home sales slump deepened in August and prices are expected to plummet further. Concerns intensified in recent weeks after a string of disappointing earnings reports from consumer companies and a cut to China’s growth forecast by UBS Group AG. The downgrade reflects an emerging consensus that the country may miss its growth target of around 5% in 2024.

[...]

Vanke’s earnings report on Friday showed how much the extended housing slump is taking its toll on China’s fourth-biggest developer by sales. The company posted a net loss of 9.85 billion yuan for the six months ended June 30, its first semi-annual loss since at least 2003. That’s higher than the upper range flagged by the firm in July, and compares with an annual profit of 12.2 billion yuan last year.

Vanke’s loss signals its finances took a sharp hit in the second quarter, considering it lost just 362 million yuan in the first three months. The slowdown in China’s market has deepened since then, as sales and prices continue to fall. Local governments are dialing back intervention over pricing of new residential projects, driving developers to offer deep discounts to lure buyers.

[...]

cross-posted from: https://feddit.org/post/2261331

Archived link

Hungarian media outlet 444 has compiled a list of the outstanding debts of the state of Hungary, primarily using data from the Public Debt Management Centre (ÁKK). Their findings show that in just three years, the Hungarian government has accumulated considerable debt to China. By the end of the second quarter of this year, Hungary owed HUF 71.79 billion (EUR 182 million) to the Asian Infrastructure Investment Bank, a debt first incurred in the last quarter of 2022.

Earlier, in the second quarter of 2022, Hungary secured a loan for the construction of the Budapest-Belgrade railway line. So far, they have drawn down HUF 341.6 billion (EUR 866 million) for this project. The total investment for the railway amounts to HUF 750 billion (EUR 1.9 billion), of which 85% is being financed by loans and 15% by co-financing. Additionally, in the spring of this year, Hungary requested a loan of EUR 1 billion in complete secrecy by the end of the second quarter, according to the ÁKK’s accounts.

On top of these loans, Hungary also has CNY 3 billion worth of foreign currency bonds due for repayment to Chinese investors this year and next, which equates to around EUR 380 million at the current exchange rates. In total, 444 estimates Hungary’s debt to China now exceeds HUF 1,000 billion (EUR 2.536 billion), although they caution it could be even higher.

If anyone here is interested in a more technical interview, here are two socialists with doctorates in economics talk about why after two hundred years of talking about fixing the housing market haven’t gotten anywhere.

cross-posted from: https://feddit.org/post/1975503

Archived link

The most important part of the [International Monetary Fund] IMF’s latest assessment of China is—alas—the appendix on China’s new methodology for calculating China’s trade balance.

It at least explains why China’s balance of payments trade surplus diverges from China’s customs trade surplus, and why the gap started to explode around 2022 [...] China’s data doesn't agree with itself. One measure of the goods deficit is a lot bigger than another measure of the goods surplus.

[...]

You might think that a foreign firm producing in China for sale in China (“in China for China” is a thing) would not register in China’s trade data. After all, goods made in China and sold in China never cross a border, and thus should not show up in the customs data.

But in the new balance of payments data, China basically reports a trade deficit with itself because of foreign firms producing in China.

[...]

If a foreign firm contracts with a Chinese firm to manufacture that foreign firm’s goods in China, and then receives delivery of those goods in China, China counts this as an export.

[...]

But the strange turn happens if the foreign firm turns around and sells the good that a contract manufacturer produced for it inside China. Such goods are now being counted as an import in the balance of payments data.

Thus, China exports goods to foreign firms operating in China, and then imports those goods back from the same firm even though the goods never leave China. If the goods are sold at a higher price than the contract manufacturer receives, it ends up being reported as a trade deficit in the balance of payments.

[...]

So Chinese production for the Chinese market by foreign firms is somehow generating a trade deficit in the balance of payments data. This, of course, makes no real economic sense.

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Bottom line: there is no good reason to think that this adjustment in captures anything important about how China’s economy interacts with the global economy. All this “fake” trade deficit does is reduce China’s reported current account surplus—as the goods surplus in the balance of payments is now about $300 billion (over 1.5 percentage points of China’s GDP) smaller than what it should be in the balance of payments data [while the author estimates] the current account surplus to be close to $700 billion even after the drop tied the resumption of tourism in 2023.

[...]

What matters for now is that a large number of analysts are using China's current account data to assess China's impact on the world without realizing that the fall in China's surplus since 2021 is basically an artifact of difficult to justify changes in China's balance of payments methodology. The real story is found in the old fashioned goods data.

cross-posted from: https://feddit.org/post/1752069

Archived link

While housing rescue policies may help provide stimulus to property markets, the economic fundamentals currently unfolding in China are unfavourable to their implementation, writes Yixiao Zhou from The Australian National University.

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China has one of the world’s highest housing price-to-income ratios at 29.59. China also has a low lending interest rate at around 4 per cent. Considering this, the room for expanding the mortgage scale is limited, constraining the ability of easing lending rules to stimulate housing demand.

Another short-term demand factor is the transfer of rural homestead land. In June 2024, Nantong, a city in Jiangsu province, introduced new policies that allow individuals who voluntarily relinquish their rural homesteads and buy homes in urban areas to receive financial subsidies. Nantong is not alone in this initiative. Encouraging the voluntary and compensated relocation from rural homesteads has become a key focus of real estate policies. But this does not seem to have affected the decreasing trend of housing prices either.

[...]

If downward adjustment in property prices leads to real estate loan default, this will pose major risks to financial stability. Japan’s experience with a massive real estate bubble burst in the early 1990s provides a crucial lesson for policymakers in China. The sharp downturn in the real estate sector led to a prolonged period of economic stagnation known as ‘Japan’s lost decade’.

[...]

Ultimately the structural problems holding back demand for properties could be solved by reforms in land allocation, financial market regulation and urbanisation policies. These reforms could help reposition China’s property sector on a healthy and sustainable growth path.

Local government debt is estimated at up to $11 trillion, including what's owed by local government financing entities that are “off balance sheet,” or not included in official estimates. More than 300 reforms the party has outlined include promises to better monitor and manage local debt, one of the biggest risks in China’s financial system.

That will be easier said than done, and experts question how thoroughly the party will follow through on its pledges to improve the tax regime and better balance control of government revenues.

“They are not grappling with existing local debt problems, nor the constraints on fiscal capacity,” said Logan Wright of the Rhodium Group, an independent research firm. “Changing central and local revenue sharing and expenditure responsibilities is notable but they have promised this before.”

The scramble to collect long overdue taxes shows the urgency of the problems.

Chinese food and beverage conglomerate VV Food & Beverage reported in June it was hit with an 85 million yuan ($12 million) bill for taxes dating back as far as 30 years ago. Zangge Mining, based in western China, said it got two bills totaling 668 million RMB ($92 million) for taxes dating to 20 years earlier.

Local governments have long been squeezed for cash since the central government controls most tax revenue, allotting a limited amount to local governments that pay about 80% of expenditures such as salaries, social services and investments in infrastructure like roads and schools.

Pressures have been building as the economy slowed and costs piled up from “zero-COVID” policies during the pandemic.

US stocks plunged on Monday morning as Friday’s dismal July jobs report continued stoking fears that the US economy is on shaky legs.

The Dow plunged 1,072 points, or 2.7%. The S&P 500 fell 4.1% and the Nasdaq Composite sank by a whopping 6.3%.

The Cboe Volatility Index, or VIX, which measures bets on expected stock market volatility, surged to 55. The last time the fear gauge hit that level outside of the pandemic was the Great Financial Crisis, in 2008.

Video about job prospects after big tech layoffs

Tldr: healthcare, education, transportation, manufacturing is outpacing IT in hiring

As Pakistan works on enacting economic reforms under a multibillion-dollar IMF bailout, Islamabad must first figure out what to do with its mountain of debt owed to China

After cash-strapped Pakistan secured a new $7 billion (€6.5 billion) bailout package from the International Monetary Fund (IMF) in July, Islamabad has started talks with Beijing on reprofiling billions in Chinese debt as it seeks to enact economic reforms.

On the table are proposals to delay at least $16 billion in energy sector debt to China, along with extending the term of a $4 billion cash loan facility due to depleting foreign exchange reserves.

Last week, Pakistani Finance Minister Muhammad Aurangzeb was in Beijing to present proposals on extending the maturity of debt for nine power plants built by Chinese companies under the multibillion-dollar Pakistan China Economic Corridor (CPEC).

On Friday, Prime Minister Shehbaz Sharif told a federal cabinet meeting that he had written a letter to the Chinese government requesting debt reprofiling, Pakistan's Dawn newspaper reported.

Reprofiling debt differs from restructuring debt in that the amount is not cut, rather, the due date for repayment is extended.

Islamabad is under immense pressure to renegotiate the expensive agreements with power producers, primarily Chinese companies, to bring down electricity prices.

Since CPEC was signed in 2015 and became one of largest components of China's Belt and Road Initiative (BRI), Beijing has poured billions of dollars into developing infrastructure in Pakistan.

The value of CPEC projects comes in a $65 billion, with the primary goal of building a shipping connection for Chinese goods from Gwadar port on the Arabian Sea over the mountain border into China's Xinjiang region.