ISLAMABAD, Jan 29: Pakistan’s caretaker Prime Minister Anwaar-ul-Haq Kakar has requested China to extend the repayment period for $2 billion in loans, as the country contends with grave economic challenges.
In a letter to the Chinese premier, PM Kakar thanked China for its continued financial assistance despite Pakistan’s economic difficulties. This request mirrors PM Kakar’s similar appeal to the UAE for a loan repayment extension, demonstrating Pakistan’s multi-pronged approach to address its economic woes.
China is likely to agree to rollover the loan repayment by one year, signalling Beijing’s willingness to work with Islamabad. Last year, Beijing had already rolled over $2 billion in debt, the support Pakistan desperately needed to make crucial payments to the International Monetary Fund (IMF).
Reaffirming Beijing’s commitment to backing Pakistan, remarks by Chinese Foreign Minister Qin Gang during his May 2023 visit demonstrate China’s steadfast support. Financial cooperation between China and Pakistan aligns with the two countries’ broader diplomatic and economic ties.
In response, the UAE has also shown support by promising to rollover $2 billion in deposits.
These steps aim to ease Pakistan’s economic burden and provide some breathing room as it navigates financial difficulties without immediately defaulting.
The push for rollovers and extensions highlights the criticality of keeping Pakistan’s economy afloat. The UAE and Chinese loans and assistance are key parts of a strategy to avert immediate default, ease external payment pressures, and lay the groundwork for long-term economic recovery. Ongoing communication between Chinese and Pakistani finance ministry officials underscores the importance of working jointly to address these economic imperatives.