In a bid to address a growing external financing gap, Pakistan has again requested China to reschedule $3.4 billion in debt, pushing for a two-year extension to ease financial pressure before crucial IMF programme review talks. The formal request was made by Deputy Prime Minister Ishaq Dar during his visit to Beijing, where the Chinese authorities were reportedly positive about the proposal.
The debt restructuring request pertains to loans provided by China’s Export-Import (Exim) Bank, which are set to mature between October 2024 and September 2027. The government is seeking a two-year extension on both direct lending and guaranteed loans to Pakistani State-Owned Enterprises. If successful, this move will significantly reduce Pakistan’s immediate external financing obligations and align with its ongoing efforts to secure $5 billion in external funding, as identified by the IMF.
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This is the second time in five months that Pakistan has approached China for debt rescheduling. In September 2024, the Finance Ministry made a similar request, which resulted in China agreeing to a two-year rollover of $2.4 billion in loans. The country, which is heavily dependent on Chinese financial support, has consistently relied on Beijing for assistance in managing its fiscal challenges, particularly in the context of its $7 billion IMF programme.
The rescheduling of the $3.4 billion debt is crucial for Pakistan as it prepares for its first IMF programme review in March. Securing this relief, along with other financing options such as the recent $1.2 billion Saudi oil facility, will be vital to bridging the foreign funding gap and stabilizing the country’s economic position.
