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Wednesday February 21, 2024

PM Kakar requests Chinese counterpart to rollover $2bn loan

Deposit time for loan is slated to complete on March 23, 2024

January 26, 2024
A money changer counts US dollar banknotes at a currency exchange office in Ankara, Turkey November 11, 2021. — Reuters
A money changer counts US dollar banknotes at a currency exchange office in Ankara, Turkey November 11, 2021. — Reuters

Caretaker Prime Minister Anwaar-ul-Haq Kakar Friday wrote a letter to his Chinese counterpart Li Qiang, requesting him to rollover Pakistan's $2 billion loan for a year, sources told Geo News.

According to the sources, the Chinese government is expected to roll over the aforementioned loan amount for a year soon.

The deposit time for the loan is slated to complete on March 23, 2024.

The sources added that the officials from Pakistan's finance ministry and authorities in China are in contact with regards to the matter.

PM Kakar, in his letter to the Chinese premier, thanked his government for financial support, the finance ministry sources said.

The sources, citing the letter, stated: "China gave a loan to the government of Pakistan in a difficult economic situation."

A total of $4 billion worth of funds in loans, as per the sources, has been kept as a safe deposit, which has reduced Pakistan's external payments burden.

Last year in May, Beijing came to Pakistan's rescue during its struggle to secure the critical pending loan from the International Monetary Fund (IMF), as the Chinese government rolled over more than $2 billion in debt.

The friendly neighbour had committed to help Islamabad meet two crucial debt repayments in June worth $2.3 billion by providing fresh funds immediately after Pakistan was to make the payments.

"The refinancing of the commercial loans worth $1.3 billion and a Chinese government loan of $1 billion would help Pakistan avert immediate default," a senior government official told The News in May 2023.

Earlier in 2023, China had already rolled over some loans to Pakistan and Chinese Foreign Minister Qin Gang also reiterated Beijing’s financial support for the country on a visit to Pakistan back in May last year.

Recently, the United Arab Emirates (UAE) also promised to roll over deposits worth $2 billion as well, after PM Kakar had written to the UAE President Mohamed bin Zayed Al Nahyan requesting one, people familiar with the matter told Geo News.

Two separate deposits were to mature during the ongoing month, the sources said, one on January 17 and the other on January 20. They added that the loans were taken on 3% and 6.5% interest.