In a recent development, China has agreed to extend the repayment deadline for Pakistan’s publicly guaranteed debt by two years. The decision was approved by Pakistan’s federal cabinet’s Economic Coordination Committee (ECC) during a meeting on Thursday.
The agreement was reached under the guidance of Finance Minister Ishaq Dar and pertains to the $6.5 billion loan provided by the Export-Import (Exim) Bank of China to finance two nuclear power reactors in Karachi. The ECC’s acceptance of the modified terms marks a significant milestone in the relationship between the two nations.
China’s Vital Role in Pakistan’s Financial Landscape:
China has emerged as Pakistan’s most prominent saviour among bilateral and commercial creditors, contributing a substantial $23.87 billion bilaterally and $5.71 billion commercially, as reported by the International Monetary Fund’s Country Report. The nation’s willingness to support Pakistan during challenging financial times has been instrumental in strengthening its economic ties.
The Relief in Numbers:
With the extension of the repayment deadline, Pakistan will have additional breathing space to manage its financial commitments. The $2 billion debt that was originally due within a short timeframe can now be deferred and repaid over an extended period. This extension provides much-needed relief to Pakistan, which had an external debt stock of $100.52 billion by the end of December 2022, out of which $29.59 billion was funded by China.
Ministry of Finance Yet to Announce Official Agreement:
Despite the ECC’s acceptance of the modified agreement, there has been no formal announcement from the Ministry of Finance regarding the extension. Once the official announcement is made, it is expected to solidify the terms of the repayment extension and further bolster economic cooperation between Pakistan and China.
China’s decision to grant Pakistan an additional two years to repay it’s $2 billion publicly guaranteed debt demonstrates the strong economic ties between the two nations. As China continues to play a vital role in Pakistan’s financial landscape, this extension comes as a significant relief, allowing Pakistan to manage its financial obligations more effectively. The formal announcement by the Ministry of Finance will provide clarity on the agreed-upon terms and pave the way for further collaboration in the future.
