Pakistan has formally requested China to reschedule $3.4 billion in official and guaranteed debt, aiming for a two-year extension on repayments during the period of its International Monetary Fund (IMF) programme.
The Express Tribune, citing official sources, that this rescheduling is essential to cover the $5 billion external financing gap identified by the IMF when it approved the $7 billion bailout package in September.
The debt, primarily owed to the Chinese Export-Import (Exim) Bank, includes both official and State-Owned Enterprise-guaranteed loans. Approximately one-third of the debt repayments fall under guaranteed loans.
Pakistani authorities remain hopeful for support from China, though no formal confirmation has been provided on whether the rescheduling has been approved.
This marks Pakistan’s second request for debt rescheduling from the Exim Bank in the past year and a half.
In July 2023, then Finance Minister Ishaq Dar announced a similar two-year rescheduling of $2.4 billion in Chinese loans, on which Pakistan has since only been making interest payments.
The current $3.4 billion request includes $750 million maturing this fiscal year, which is crucial for meeting IMF’s conditions that the $7 billion programme is fully funded and that Pakistan’s debt remains sustainable.
Of the $5 billion financing gap identified by the IMF, $2.5 billion pertains to the current fiscal year. Although Pakistan assured the IMF of arrangements for this amount, some anticipated borrowings are delayed.
Meanwhile, an unscheduled IMF mission is set to visit Pakistan on Monday to assess the country’s economic performance, a move reflecting possible concerns over Pakistan’s adherence to the programme’s terms.
Pakistan has also requested a $1.4 billion loan and sought an increase in the Currency Swap Agreement limit to CNY 40 billion ($5.7 billion), an expansion that would provide additional liquidity.
In addition to this, Pakistan had sought over $16 billion in rescheduling for Chinese energy debts, although no memorandum of understanding or formal agreement has yet been secured from China on this request.
