Pakistan requests China to reschedule $3.4 billion debt for two years

Photo : AP

Pakistan has asked China to give it more time to repay a $3.4 billion loan. The country wants a two-year extension so that it can manage its financial problems. The International Monetary Fund (IMF)** said that Pakistan needs more money to cover a funding gap, so the government is trying to arrange its payments carefully.

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This is the second time in five months that Pakistan has made such a request to China’s Export-Import (Exim) Bank. Earlier, in September last year, Pakistan also asked for help with its loan payments. This time, Deputy Prime Minister Ishaq Dar made the request when he visited Beijing recently.

Pakistan wants China’s Exim Bank to delay payments for loans that are due between October 2024 and September 2027. The government has asked for two extra years to repay these loans, but it will still pay the interest on time.

Officials said that China has responded positively to the request. The Pakistani government is hopeful that *China will agree** and that this will help reduce Pakistan’s financial burden. The $3.4 billion loan is due during the same time as the three-year IMF program, so if Pakistan gets extra time, it will help ease financial pressure.

Pakistan needs $5 billion in foreign money over the next three years. The loan extension is very important to make sure the country can manage its finances. The loans from **China’s Exim Bank include money **directly borrowed by the government** and money given to state-owned companies (SOEs).

From **October 2024 to September 2025, Pakistan needs to repay $505 million in direct loans to the government. This period is also important because the IMF will review Pakistan’s progress. Between October 2025 and September 2027, another $1.7 billion in direct loans will be due. This means Pakistan needs $2.2 billion in extra time for these loans alone. Another $1.2 billion in loans to state-owned companies is also due during this time, with most of them needing to be paid by October 2024.

If Pakistan does not have to repay this $3.4 billion loan right away, it will reduce its financial stres. To manage its money problems, Pakistan has also borrowed money from other places. This week, Pakistan got a $1.2 billion oil facility from Saudi Arabia. The government also took a $300 million loan through United Bank Limited (UBL)**.

Pakistani officials have already talked many times with China’s Exim Bank about these loans and shared all details with them. **China has been a big help** in keeping Pakistan financially stable. In the past, China has allowed Pakistan to **extend $4 billion in cash deposits**, given **$6.5 billion in commercial loans**, and provided a $4.3 billion trade finance facility.

Despite these efforts, Pakistan still faces big financial challenges. A credit rating agency said that Pakistan is still struggling to get enough money from foreign lenders**. Pakistan’s budget includes $6 billion in funding from global institutions, including the IMF, but $4 billion of that will be used to pay back old debts.

Pakistan is working hard to manage its financial situation. The government hopes that **China will agree to the loan extension**, which will help the country in the coming years. However, Pakistan still needs to find more solutions to keep its economy stable in the long run.