Caretaker Prime Minister Anwaar-ul-Haq Kakar has urgently approached China seeking an extension of a crucial $2 billion loan to alleviate Pakistan’s economic challenges. This move comes in the wake of a similar plea made to the United Arab Emirates (UAE).
Prime Minister Kakar has formally requested his Chinese counterpart, Li Qiang, to extend the loan tenure by one year. It is anticipated that China will soon grant the extension, with the deposit deadline set for March 23, 2024.
Ongoing discussions between officials from Pakistan’s finance ministry and their Chinese counterparts highlight the diplomatic efforts to secure financial collaboration in the face of economic difficulties.
Expressing gratitude for China’s support, Prime Minister Kakar acknowledged the vital role played by the Chinese government during challenging economic periods, as confirmed by finance ministry sources.
The significance of this extension lies in the secure deposit of $4 billion in loans, effectively alleviating Pakistan’s external payments burden. Notably, in May of the preceding year, China proved to be a crucial ally when Pakistan faced challenges securing a pending loan from the International Monetary Fund (IMF). During that critical period, the Chinese government rolled over more than $2 billion in debt, showcasing steadfast support for Pakistan’s financial stability.
A senior government official emphasized, “The refinancing of commercial loans totaling $1.3 billion and a Chinese government loan of $1 billion would help Pakistan avert immediate default,” underscoring the strategic financial collaboration between the two nations.
This recent appeal for financial support builds upon a series of loan rollovers initiated by China in 2023. Chinese Foreign Minister Qin Gang reiterated Beijing’s commitment to providing financial assistance during his visit to Pakistan in May of that year. The continued partnership between Pakistan and China stands as a cornerstone in addressing economic challenges and fostering mutual financial stability.
