China Rolls Over $2 Billion Loan to Pakistan

As per the news reports, China has provided $2 billion in loans to Pakistan. However, China has agreed to extend the term of the $2 billion loan in line with current domestic conditions. According to the unofficial indication from China, the loan repayment schedule will be extended. Moreover, the loan will now be delayed pending official confirmation from the Finance Ministry.

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The loan’s current interest rate of 7.1% is the 6M Secured Overnight Finance Rate (SOFR) plus 1.715%. Moreover, it is noteworthy that the rates proposed by China were increased for the first time. In response, in a letter to Chinese Premier Li Keqiang, Prime Minister Anwar Haq Kakar formally requested a one-year delay in the repayment of the $2 billion loan.

Pakistan has desired the extension as a whopping $2 billion of the $4 billion deposits it has secured from China are scheduled to mature on March 23, 2024. Moreover, this is an important decision that will have significant implications for Pakistan and trigger necessary action. That ensures much-needed financial flexibility.

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