Islamabad:
In a significant development, China has once again extended the deadline for the loan of $ 2 billion owed by Pakistan for another year. The debt was originally to mature on March 24.
Officials of the Ministry of Finance confirmed the development of the Express PAkGazette, stating that this extension will help Pakistan strengthen their foreign exchange reserves. China’s continuous economic support, Pakistan’s former friend is crucial for economic stability and the recovery of the country, they added.
“China went through a loan of $ 2 billion to Pakistan,” said Finance Minister Khurram Schehzad, Reuters on a text message on Saturday.
Pakistan is working to strengthen its finances after ensuring a rescue of the International Monetary Fund of $ 7 billion (IMF) in September 2024. The first delivery of the loan is currently under review, and if it is successful, Pakistan will receive an additional $ 1 billion.
Ensuring external financing has previously been a key condition for the IMF to approve rescue agreements for the Nation with liquidity problems. Pakistan needs to pay more than $ 22 billion in external debt in fiscal year 2025, including almost $ 13 billion in bilateral deposits, Fitch said.
China had passed the loan for a year in February last year in existing terms after initially looking for an increase in the price. China has been a key economic partner for Pakistan, providing financial assistance and investments, particularly under the initiative of the China-Pakistan Economic Corridor (CPEC).
The extension occurs as Pakistan continues to browse the economic challenges, including a balance of ongoing payments and conversations with international lenders to ensure greater financial assistance.
The authorities said that the loan postponement will relieve immediate reimbursement pressures as the government focuses on stabilizing the economy. Earlier this week, Pakistan and the IMF officially began discussions for the first review of the installation of extended funds (EFF) of $ 7 billion insured last year.
According to the Ministry of Finance, the IMF delegation, directed by Nathan Porter, met with the Minister of Finance, Muhammad Aurengzeb in Islamabad. The meeting focused on the general economic situation in the country.
During the meeting, Pakistan assured the global lender his commitment to fiscal discipline and economic reforms as conversations continue in Islamabad for the last economic review.
The Minister of Finance, Aurengzeb, informed the IMF delegation about the country’s macroeconomic situation, income collection and progress in structural reforms. He reiterated that Pakistan is still committed to meet the conditions of his loan program of $ 7 billion.
Successive governments have failed to take advantage of non -dedeas creation tickets, which have exposed the country to several risks. Exports are growing at a rate that is not enough to finance imports. Foreign direct investment is still dry and stagnant.
Rolling a loan means extending the deadline of an existing loan instead of paying it in its entirety when it expires. This is generally negotiating new terms with the lender, effectively refining the loan, so that the borrower can continue using the funds while delays the complete refund.
With contributions of reuters and news desktop
