China Extends $2 Billion Loan to Pakistan

China has agreed to extend the repayment period for Pakistan’s $2 billion loan, originally due on March 23, coinciding with Pakistan Day. Initially, China had proposed raising the loan’s interest rates, but it appears they have opted instead to extend the repayment period.

Officials from Pakistan’s Ministry of Finance have reached an agreement with Beijing, awaiting confirmation from the Chinese embassy. Last month, Pakistan’s interim Prime Minister Anwaarul Haq Kakar had made a formal request to China for loan extension.

In the previous fiscal year, Pakistan paid a substantial interest amounting to Rs26.6 billion to China, Saudi Arabia, and the UAE. This figure marked a significant 118% increase from the previous year, largely attributed to currency devaluation.

Despite Pakistan’s gross official foreign exchange reserves standing at $8 billion, the country has resorted to borrowing from regional counterparts during challenging economic periods. However, the escalating borrowing has led to mounting repayment challenges.

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