ISLAMABAD – China has extended the repayment period for a $2 billion debt owed by Pakistan, as disclosed by media reports on Wednesday.
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Pakistan had initially acquired a $2 billion loan from China at a 7.1% interest rate, with the loan set to mature in the upcoming week of March.
Pakistan disbursed Rs26.6 billion in the previous fiscal year to China, Saudi Arabia, and the United Arab Emirates (UAE) against the $9 billion deposits placed by these three nations with the State Bank of Pakistan.
This extension will bolster the depleting foreign reserves of the State Bank of Pakistan (SBP), currently standing at $8 billion.
Last month, interim Prime Minister Anwaarul Haq Kakar penned a letter to his Chinese counterpart Li Qiang, requesting the extension of the $2 billion loan.
In his correspondence with the Chinese premier, the caretaker prime minister expressed gratitude for China’s financial assistance.
A total of $4 billion in loans has been kept as a secure deposit, thereby alleviating Pakistan’s external payment obligations.
In May of the previous year, China came to Pakistan’s aid amid its efforts to secure a crucial pending loan from the International Monetary Fund (IMF), extending over $2 billion in debt.
This assistance from China was aimed at helping Pakistan meet two critical debt repayments totaling $2.3 billion, ensuring immediate relief for the country.
Earlier in the same year, China had already extended the repayment period for some loans to Pakistan, with Chinese Foreign Minister Qin Gang reaffirming Beijing’s commitment to financial support during a visit to Pakistan in May.
