Pakistan requests China to reschedule Rs 28,000-crore debt

This is the second time in the past five months that Islamabad has requested Beijing to reschedule loans

Pakistan has requested China to reschedule Rs 28,000-crore debt for two years to bridge a foreign funding gap identified by the International Monetary Fund, according to a media report on Saturday.

This is the second time in the past five months that Islamabad has requested Beijing to reschedule loans provided by its Exim bank. Pakistan’s Deputy Prime Minister Ishaq Dar made the formal request during this week’s visit to Beijing, The Express Tribune newspaper reported, quoting government sources. Pakistan requested the Export-Import (Exim) Bank of China to consider rearrangement of its loans due from October 2024 to September 2027, said the government officials.

Deputy Prime Minister Ishaq Dar. Pic/X/@ForeignOfficePk

A two-year extension was sought to repay the official and guaranteed debt obtained from the Exim Bank. Pakistan would keep making interest payments. Sources said that Pakistan was required to identify financing sources to fill the external financing gap of Rs 43,000 crore for the three-year programme period. They added the Chinese authorities were positive and that Beijing would hopefully accept the request to lessen Pakistan’s external funding woes.

Earlier, in September last year, the Finance Minister wrote to the Exim Bank, requesting the rescheduling. According to a joint China-Pakistan statement, the Pakistani side reiterated its high appreciation for China’s valuable support for its fiscal and financial stability. The statement was issued after President Asif Ali Zardari’s state visit to Beijing.

The Rs 28,000-crore debt was maturing between October 2024 and September 2027, which coincided with the three-year IMF programme period. According to the sources, the bank has given two types of loans, direct lending and guaranteed lending to State-Owned Enterprises (SOEs). If Pakistan does not repay the debt, its external financing gap will be reduced by the same amount. This week, the government also secured a R10,000 crore Saudi oil facility and took a R2,600 crore loan through United Bank Limited to bridge the overall financing gap.

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