China rolls over 2-billion-dollar loan to Pakistan

The Ministry of Finance said that China has rolled over a $2 billion loan to Pakistan today (Wednesday, February 28).

According to the media reports, Pakistan borrowed $2 billion from China with an interest rate of 7.1%; the debt was due to mature in the first week of March. For the $9 billion in deposits that China, Saudi Arabia, and the United Arab Emirates (UAE) made with the State Bank of Pakistan, Pakistan paid them Rs26.6 billion in the most recent fiscal year. The rollover will help the State Bank of Pakistan (SBP) reduce its $8 billion in foreign reserves.

Anwaar-ul-Haq Kakar, the acting prime minister, requested the rollover of a $2 billion loan in a letter to Li Qiang, his Chinese counterpart, last month. According to sources who spoke with Geo News, the interim prime minister asked Beijing to extend Pakistan’s $2 billion loan for a year in a letter to China’s premier. According to officials in the finance ministry, he also expressed gratitude to the Chinese government for their financial assistance.

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The letter stated: “China gave a loan to the government of Pakistan in a difficult economic situation.”

Pakistan no longer has to bear the burden of its external payments due to the safekeeping of loans totaling $4 billion. In May of last year, when the Chinese government was rolling over more than $2 billion in debt, Beijing helped Pakistan in its fight to obtain the crucial IMF loan that was still outstanding.

The cordial neighbor had promised to provide extra funding to Islamabad as soon as Pakistan was scheduled to make the $2.3 billion debt repayments, helping the country meet two critical debt repayment deadlines in June.

China had previously rolled over a few loans to Pakistan earlier in the year, and during a visit to the nation in May of that year, Chinese Foreign Minister Qin Gang reaffirmed Beijing’s financial support for Pakistan.