Islamabad (Agencies): China has rolled over a $2 billion loan to Pakistan, providing crucial financial relief as the country grapples with mounting external debt obligations. Adviser to the Finance Minister, Khurram Schehzad, confirmed the development in a message to Reuters on Saturday.
The move comes as Pakistan works to stabilize its finances following a $7 billion bailout agreement with the International Monetary Fund (IMF) in September 2024. The first installment of the IMF loan is currently under review, and a successful assessment could lead to an additional $1 billion in funding.
Pakistan faces significant external debt repayments exceeding $22 billion in the fiscal year 2025, including nearly $13 billion in bilateral deposits. According to a report by credit rating agency Fitch, securing external financing remains a key condition for IMF-backed financial support.
The World Bank’s International Debt Report, released in December, highlighted China as Pakistan’s largest creditor, holding nearly $29 billion in loans. Pakistan’s total external debt, including IMF liabilities, stood at $130.85 billion in 2023, accounting for 352% of its total exports and 39% of its Gross National Income (GNI). Debt servicing in the same year amounted to 43% of total exports and 5% of GNI.
China holds a 22% share of Pakistan’s total external debt, followed by the World Bank (18%) and the Asian Development Bank (15%). Saudi Arabia is the second-largest bilateral lender, contributing around $9.16 billion, or 7% of Pakistan’s total debt.
The rollover of the Chinese loan provides temporary relief, but Pakistan remains under pressure to secure additional external financing and implement economic reforms to stabilize its fiscal position.