China rolls over $2.4 billion Pakistan loan for 2 years

Islamabad: Pakistan’s finance minister Ishaq Dar on Thursday said China has rolled over a $2.4 billion loan for the cash-strapped Islamic nation for two years, a move aimed at helping the country overcome one of its worst economic crises.

The latest extension in loan maturities by Beijing was a boost to Pakistan’s fragile foreign exchange reserves, which are still only enough to pay the import bill for a period of two months.

In a post on the X platform, formerly known as Twitter, Ishaq Dar said the Chinese EXIM Bank rolled over for two years the “principal amounts” of the $2.4 billion loan, which Islamabad was to have paid back in 2024 and 25.

However, he said Pakistan would now only make interest payments in both years.

China is a longtime friend of Pakistan and it has played a key role in helping Pakistan avoid a default this year, though there has been concern in the country about how Islamabad would repay the growing Chinese loans.

Some analysts in Pakistan call it a debt trap, though the government says there is no truth to such assumptions. The latest development comes two weeks after the International Monetary Fund deposited a much-awaited first installment of $1.2 billion in Pakistan’s central bank under a bailout to help Pakistan avoid default. It bolstered Pakistan’s foreign exchange reserves, which shrank to $4 billion recently, raising fears of a default.

Pakistan’s foreign exchange reserves jumped to $14 billion last week.

The IMF loans had been on hold since December mainly because of non-compliance with the terms of the previous $6 billion bailout by Pakistan. It forced Pakistan to seek financial help from friendly countries like China, Saudi Arabia and the United Arab Emirates.

Image courtesy of Express Tribune

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