Islamabad:
In significant development, China has once again extended the deadline for the loan of $ 2 billion in Pakistan from another year. The debt was originally to mature on March 24.
Officials of the Ministry of Finance have confirmed the development of L’Express PK Press Club, declaring that this extension will help Pakistan to strengthen its exchange reserves. The continuous economic support of China, the longtime friend of Pakistan, is crucial for the stability and economic recovery of the country, they added.
“China has returned a 2 billion dollars loan to Pakistan,” said the Minister of Finance Minister Khurram Schehzad on Saturday.
Pakistan endeavors to strengthen its finances after obtaining a bailout of the international monetary fund of $ 7 billion (IMF) in September 2024. The first episode of the loan is currently being examined and, in the event of success, Pakistan will receive an additional billion dollars.
Securing external funding has already been a key condition for the IMF to approve the bailout transactions for the nation short of money. Pakistan must reimburse more than $ 22 billion in external debt during the year 2025, including nearly $ 13 billion in bilateral deposits, said Fitch.
China had overturned the loan for a year in February of last year on existing conditions after initially requested a price increase. China has been a key economic partner for Pakistan, providing financial and investment aid, particularly within the framework of the Chine-Pakistan Economic Corridor (CPEC) initiative.
The extension comes as Pakistan continues to face economic challenges, including a crisis in the balance of payments and ongoing interviews with international lenders to obtain additional financial aid.
The officials said that the reversal of loans would facilitate immediate reimbursement pressures while the government focuses on stabilization of the economy. Earlier this week, Pakistan and IMF officially launched discussions for the first examination of the prolonged funding of $ 7 billion (EFF) guaranteed last year.
According to the Ministry of Finance, the IMF delegation, led by Nathan Porter, met the Minister of Finance Muhammad Aurangzeb in Islamabad. The meeting focused on the country’s overall economic situation.
During the meeting, Pakistan assured the world lender of its commitment to tax discipline and economic reforms while talks continue in Islamabad for the last economic review.
The Minister of Finance Aurangzeb informed the IMF delegation on the macroeconomic situation of the country, the collection of income and the progress of structural reforms. He reiterated that Pakistan remains determined to fulfill the conditions of its $ 7 billion loan program.
Successive governments have failed to exploit the creation of entries, which have exposed the country at various risks. Exports increase at a rate that is not enough to finance imports. Direct foreign investment remains dry and stagnant.
Riding a loan means extending the duration of an existing loan instead of reimbursing it in full when it is due. This is generally done by negotiating new conditions with the lender – effective refinancing of the loan – so that the borrower can continue to use the funds while delaying full reimbursement.
With the contribution of Reuters and News Desk
