The Express Tribune reported on Saturday that Pakistan has requested that China reschedule the $3.4 billion debt for two years. The report stated that the request had been submitted to assist in closing a foreign funding deficit identified by the International Monetary Fund (IMF).
Pakistan has requested that the Chinese authorities reschedule the loans provided by its Exim bank for the second time in the past five months, according to PTI. During his visit to China this week, Deputy Prime Minister Ishaq Dar formally submitted the request.
The Pakistani media agency, citing official sources, reported that the officials requested the Export-Import (Exim) Bank of China to reschedule the arrangement of its loans from October 2024 to September 2027.
According to government sources, Pakistan has asked for a two-year extension on repaying the official and guaranteed debt taken from the Exim Bank. The report states that Pakistan will keep making interest payments in the meantime.
China and Pakistan Express Mutual Support for Financial Stability in Joint Statement
Pakistan must find sources of funding to cover a $5 billion external financing shortfall for the three-year program, as required by the IMF. Sources indicate that the Chinese government has shown optimism and is likely to support Pakistan’s request for help with its external funding issues.
On Thursday of this week, China and Pakistan released a joint statement in which the latter expressed its profound gratitude for the Chinese authorities’ assistance in maintaining its financial stability.
According to sources, rescheduling is paramount to Pak and is a component of its comprehensive $5 billion external financing strategy. This strategy is necessary to address the deficit identified by the IMF during the signing of the bailout package last September.
The Exim direct loans, totalling $505 million, were scheduled to mature from October 2024 to September 2025. This period also includes the first two evaluations of the IMF programme.
Subsequently, from October 2025 to September 2027, the government will experience the maturity of an additional branch of direct loans valued at $1.7 billion, resulting in a total of $2.2 billion in direct lending that requires a two-year extension.
The bank has disbursed two categories of loans to state-owned enterprises (SOEs): direct lending and guaranteed lending. This is particularly noteworthy.
The majority of China’s $1.2 billion loans to state-owned enterprises (SOEs) will mature in October of this year. The report noted that Pakistan’s external financing deficit will be reduced by the same amount if the $3.4 billion debt is not repaid.
Salman Ahmad is known for his significant contributions to esteemed publications like the Times of India and the Express Tribune. Salman has carved a niche as a freelance journalist, combining thorough research with engaging reporting.
