China agrees to reschedule USD 2 billion debt recovery

Islamabad [Pakistan]: Pakistan’s all-weather friend China has agreed to reschedule the debt of USD 2 billion of Islamabad for a period of two years, providing a major relief to the government, ARY News reported citing sources.

According to sources, China Eximbank has officially written to Pakistan about the delay in the recovery of debt. Pakistan is also exempted from paying additional interest on the loan, sources added.

This is a major relief to Pakistan government which is in the process of rebuilding foreign exchange reserves through fresh loans and rolling over maturing debt.

Notably, the deadline for Pakistan to repay the debt amount of all 31 loan agreements was increased from July 21, 2023, to June 30, 2025, sources added.

Earlier, Pakistan Prime Minister Shehbaz Sharif said that China has rolled over a USD 600 million loan to Pakistan, helping shore up the country’s foreign exchange reserves.

“Exim Bank of China rolled over USD 600 million to Pakistan, which increased our foreign currency reserves,” the premier said, adding that the assistance from friendly countries is improving economic indicators, according to ARY News.

Notably, this was in addition to over USD 5 billion in loans that longtime ally China has rolled over for Pakistan in the last three months, the prime minister said last week, helping Pakistan avert a default as negotiations to secure the IMF bailout dragged on.

The State Bank of Pakistan said the current account recorded a surplus of USD 334 million in June.

Earlier in January, PM Sharif had stated that it is embarrassing to ask for loans but then again it asked for loans from IMF and China.

In contrast, Pakistan’s Army Chief Syed Asim Munir on Monday underlined the need to make the country self-reliant to end the dependency on foreign loans, which the cash-strapped nation recently secured with the International Monetary Fund (IMF), Geo News reported.

Amid the economic turmoil, Munir said that Pakistanis must throw out the beggar’s bowl.
He said security and the economy are interlinked and indispensable to each other. COAS also stated that the Pakistan Army is proud to serve its nation, adding that the military drew its strength from the people and vice-versa, reported Geo News.