Pakistan Receives $2 Billion Loan Roll-Over from China: Ministry Confirms

Loan repayment extension to ease pressure on Pakistan’s foreign reserves

By DTD- On Mar 9, 2025

Islamabad-Mudassar Iqbal/Webdesk)-China has granted Pakistan a one-year extension on repaying a $2 billion loan, according to the Ministry of Finance. The loan was initially due on March 24, but China’s agreement to extend the deadline provides Pakistan with much-needed financial relief.

This move is expected to ease the pressure from the International Monetary Fund on Pakistan, which is facing economic challenges, including dwindling foreign exchange reserves.

This extension comes as Pakistan faces economic challenges, including pressure on foreign exchange reserves.

Around 92% Pakistan’s external debt is owed by three major sources including multilateral and bilateral creditors as well as through international bonds. Among the bilateral creditors, China is on the top keeping in view the total external debt and liabilities.

Meanwhile, the cash-strapped country is seeking a fresh loan tranche from the International Monetary Fund (IMF), with the Washington-based lender’s team currently in Pakistan for negotiations.

Islamabad secured the $7 billion Extended Fund Facility (EFF) last summer to help claw its way out of an economic crisis.

The programme has played a key role in stabilising Pakistan’s economy and the government has said the country is on course for a long-term recovery.

Finance Minister Muhammad Aurangzeb told Reuters that Pakistan was “well positioned” for the first review of its $7 billion IMF bailout programme.

Pakistan was able to build some trust with the IMF by completing a short-term nine-month programme last year. Previous loan programs in Pakistan ended prematurely or saw delays after the governments at the time faltered on meeting key conditions.

Moreover, the government is negotiating a Rs1.25 trillion ($4.47 billion) loan with commercial banks to reduce its bulging energy sector debt, the power minister and banking association said.

Plugging unresolved debt across the sector is a top priority under an ongoing $7 billion IMF bailout, which has helped Pakistan dig its way out of an economic crisis.

“The loan will be repaid over a period of 5 to 7 years,” Power Minister Awais Leghari told Reuters, adding that the term sheets are yet to be signed.