China has granted a one-year extension on the repayment of Pakistan’s $2 billion loan, alleviating some of the financial pressure exerted by the International Monetary Fund on the dollar-deficient nation. The loan, which was initially scheduled for repayment on March 24, will now have a revised deadline, offering essential financial relief to Pakistan.
According to Geo News, the Ministry of Finance has confirmed this rollover agreement with China, highlighting that the extension is particularly significant as Pakistan grapples with various economic difficulties, including strains on its foreign exchange reserves.
Approximately 92 percent of Pakistan’s external debt is owed to three primary sources, which encompass multilateral and bilateral creditors, as well as international bonds. Among these bilateral creditors, China holds the largest share when considering the total external debt and liabilities.
In the meantime, the financially challenged country is pursuing a new loan tranche from the International Monetary Fund (IMF), with a team from the Washington-based institution currently engaged in negotiations in Pakistan. Last summer, Islamabad secured a $7 billion Extended Fund Facility (EFF) to assist in navigating its economic crisis. This program has been instrumental in stabilizing Pakistan’s economy, and the government asserts that the nation is on a path toward long-term recovery.
