China Extends $2 Billion Loan to Pakistan, Providing Financial Relief
Islamabad, The Gulf Observer: In a significant development, China has rolled over a $2 billion loan to Pakistan for one year, the Ministry of Finance confirmed on Saturday. Originally due for repayment on March 24, China’s extension offers crucial financial relief to Pakistan as it navigates economic challenges, including pressure on foreign exchange reserves.
Pakistan’s external debt structure shows that 92% of its external obligations come from multilateral and bilateral creditors as well as international bonds. Among bilateral creditors, China holds the largest share in Pakistan’s total external debt and liabilities.
Meanwhile, Pakistan is also engaged in negotiations with the International Monetary Fund (IMF) for the next loan tranche under its $7 billion Extended Fund Facility (EFF), which was secured last year to support economic stabilization. Finance Minister Muhammad Aurangzeb stated in an interview with Reuters that Pakistan is “well positioned” for the first review of its IMF bailout program.
The government is also in discussions to secure a Rs1.25 trillion ($4.47 billion) loan from commercial banks to address mounting energy sector debt, a key requirement under the IMF program. The IMF-backed reforms have played a pivotal role in stabilizing Pakistan’s economy, and the government remains optimistic about long-term recovery and economic resilience.
