China has approved the rollover of a $2 billion loan to Pakistan, confirmed by caretaker finance minister Shamshad Akhtar on Thursday. The loan, which was initially due in March, has now been extended for one year. Beijing communicated this decision to Islamabad, according to sources.
Pakistan’s economy, facing financial challenges, recently obtained a $3 billion standby arrangement from the International Monetary Fund. Fitch, a ratings agency, highlighted the urgency for the country to secure financing from both multilateral and bilateral partners due to its vulnerable external position.
This development follows a letter from Caretaker Prime Minister Anwaar-ul-Haq Kakar to his Chinese counterpart, requesting the loan rollover and appreciating China’s assistance in easing Pakistan’s foreign payment burdens. Additionally, Pakistan received $4 billion in safe deposits from China to address its balance of payments issue.
Furthermore, on January 17, the United Arab Emirates (UAE) also agreed to rollover a $2 billion loan to Pakistan for one year. This decision came after Islamabad’s request to the UAE President Sheikh Mohammed bin Zayed al-Nahyan for the loan rollover, which was due in January.
Pakistan’s efforts to secure financial support through loan rollovers from China and the UAE demonstrate the country’s ongoing struggles with its economic stability and foreign payment obligations.
