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China ‘rolls over’ $2 billion mortgage to Pakistan amid ‘tough financial scenario’

China 'rolls over' $2 billion loan to Pakistan amid 'difficult economic situation'
In a significant growth, China has rolled over a $2 billion debt to Pakistan.

Pakistan has borrowed $2 billion from China on a 7.1% rate of interest, the sources mentioned, including that the mortgage was maturing within the week of March.

The sources mentioned Pakistan paid Rs26.6 billion within the final fiscal yr to China, Saudi Arabia, and the United Arab Emirates (UAE) on the $9 billion deposits that these three nations positioned with the State Financial institution of Pakistan.

The rollover will help the State Financial institution of Pakistan (SBP) depleting international reserves which stand at $8 billion.

Final month, caretaker Prime Minister Anwaar-ul-Haq Kakar wrote a letter to his Chinese language counterpart Li Qiang, in search of the rollover of a $2 billion mortgage.

In his letter to China’s premier, the interim prime minister has requested that Beijing roll over Pakistan’s $2 billion mortgage for a yr.

PM Kakar, in his letter to the Chinese language premier, additionally thanked the Chinese language authorities for monetary help, the finance ministry sources mentioned.

The sources, citing the letter, acknowledged: “China gave a mortgage to the federal government of Pakistan in a tough financial scenario.”

A complete of $4 billion value of funds in loans, as per the sources, has been stored as a protected deposit, which has decreased Pakistan’s exterior funds burden.

Final yr in Might, Beijing got here to Pakistan’s rescue throughout its battle to safe the vital pending mortgage from the Worldwide Financial Fund (IMF), because the Chinese language authorities rolled over greater than $2 billion in debt.

The pleasant neighbour had dedicated to assist Islamabad meet two essential debt repayments in June value $2.3 billion by offering contemporary funds instantly after Pakistan was to make the funds.

“The refinancing of the industrial loans value $1.3 billion and a Chinese language authorities mortgage of $1 billion would assist Pakistan avert instant default,” a senior authorities official instructed The Information in Might 2023.

Earlier final yr, China had already rolled over some loans to Pakistan and Chinese language International Minister Qin Gang additionally reiterated Beijing’s monetary help for the nation on a go to to Pakistan again in Might final yr.