China extends repayment period of $2 billion loan to Pakistan by one year

Islamabad: China extended the repayment period of Pakistan’s $2 billion loan by one year, easing pressure of the International Monetary Fund on the dollar-deficit country. The loan was originally due for repayment on March 24, but China has agreed to extend the deadline, providing Pakistan with crucial financial relief.

Geo News quoted the Ministry of Finance as confirming the roll over by China, adding that this extension comes as Pakistan faces economic challenges, including pressure on foreign exchange reserves.

Around 92 per cent of Pakistan’s external debt is owed by three major sources, including multilateral and bilateral creditors as well as through international bonds. Among the bilateral creditors, China is on the top keeping in view the total external debt and liabilities.

Meanwhile, the cash-strapped country is seeking a fresh loan tranche from the International Monetary Fund (IMF), with the Washington-based lender’s team currently in Pakistan for negotiations.

Islamabad secured the USD 7 billion Extended Fund Facility (EFF) last summer to help claw its way out of an economic crisis.

The programme has played a key role in stabilising Pakistan’s economy and the government has said the country is on course for a long-term recovery.