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China Extends $2 Billion Loan To Pakistan

China Extends $2 Billion Loan To Pakistan

China has granted Pakistan an extension on the repayment period for a $2 billion debt, according to media reports on Wednesday. Initially, Pakistan had secured a $2 billion loan from China with a 7.1% interest rate and the loan was set to mature in the upcoming week of March.

During the previous fiscal year, Pakistan disbursed Rs26.6 billion to China, Saudi Arabia, and the United Arab Emirates (UAE) against the $9 billion deposits placed by these three nations with the State Bank of Pakistan. This extension is expected to enhance the depleting foreign reserves of the State Bank of Pakistan, which currently stand at $8 billion.

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Interim Prime Minister Anwaarul Haq Kakar wrote a letter to his Chinese counterpart Li Qiang last month, requesting the extension of the $2 billion loan. In the letter, the caretaker prime minister expressed gratitude for China’s financial assistance. The $4 billion in loans, kept as a secure deposit, is providing relief for Pakistan’s external payment obligations.

China’s support last year played a crucial role in helping Pakistan secure a pending loan from the International Monetary Fund (IMF). The $2 billion in debt extended by China aided Pakistan in meeting two significant debt repayments totaling $2.3 billion, providing immediate relief to the country.

This is not the first time China has extended the repayment period for loans to Pakistan. Earlier in the same year, during a visit to Pakistan in May, Chinese Foreign Minister Qin Gang reaffirmed Beijing’s commitment to providing financial support.