Ishaq Dar says China has rolled over $2.4bn loan for two years

Published July 27, 2023
Finance Minister Ishaq Dar addresses the media in this file photo from July. — DawnNewsTV
Finance Minister Ishaq Dar addresses the media in this file photo from July. — DawnNewsTV

Finance Minister Ishaq Dar said on Thursday that China has rolled over a $2.4 billion loan to Islamabad for a period of two years, a boost to the country’s economy as it tries to build its foreign reserves after clinching a deal with the International Monetary Fund (IMF).

“Chinese Exim bank rolled over principal amounts totalling $2.4bn which are due in [the] next two fiscal years,” he said in a post on social platform X, formerly Twitter.

“Pakistan will make interest payments only over the next two years,” Dar said, meaning the waiver is only for the principal loan amount.

A source at Pakistan’s finance ministry told Reuters that over $600 million of the loan was maturing this fiscal year, and that Islamabad has already received a confirmation of the rollover.

“In principle, China and Pakistan have close cooperation in economic and financial sectors, and we will continue to advance cooperation with Pakistan to support the country in achieving stability and development,” Chinese Foreign Ministry spokesperson Mao Ning said.

The development comes a little over a week after Prime Minister Shehbaz Sharif announced that China had rolled over a $600 million loan to Pakistan, helping shore up the country’s foreign exchange reserves.

This was in addition to over $5bn in loans that longtime ally China had rolled over for Pakistan in the last three months, according to the premier, helping Pakistan avert a default as negotiations to secure the IMF bailout dragged on.

Beijing has pledged over $65bn in building infrastructure in Pakistan as part of a Belt and Road Initiative (BRI).

Pakistan secured a last-gasp $3bn IMF bailout on June 30, which later disbursed an initial upfront instalment of about $1.2bn.

This was followed by a further $2bn of financial support from Saudi Arabia and $1bn from the UAE, shoring up the central bank’s reserves, which had dropped to a critical level of barely enough to pay for a month of controlled imports.

The central bank said last week that foreign exchange reserves almost doubled, rising $4.2bn to $8.7bn during the week ending July 14.

The next two reviews of the IMF deal will pass through political uncertainty ahead of general elections due later this year that will be followed by a government transition.

The IMF team this month met the leadership of all political parties, including former prime minister Imran Khan, to seek a continuation of its bailout objectives irrespective of who comes to power.

A joint session of the country’s parliament on Wednesday passed legislation to enable a caretaker administration which will take over after the government of PM Shehbaz retires next month to take policy decisions on bilateral and multilateral agreements, the government said in a statement.

Follow Dawn Business on X, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Deadlocked
Updated 19 Apr, 2025

Deadlocked

Politicians’ refusal to talk to each other and resolve issues has created space for a different type of rulership to take over.
Trump vs Harvard
19 Apr, 2025

Trump vs Harvard

AMONGST the ‘enemies of the people’ in Trumpian America are elite universities seen as the bastions of liberal...
External account stability
19 Apr, 2025

External account stability

DRIVEN by a major spike in workers’ remittances last month, the country’s current account posted a record ...
Paying the price
Updated 18 Apr, 2025

Paying the price

Pakistan is trapped in a relentless cycle of climate volatility.
Political solution
18 Apr, 2025

Political solution

THOUGH the BNP-M may have ended its 20-day protest sit-in outside Quetta on Wednesday, the core issues affecting...
Grave desecration
18 Apr, 2025

Grave desecration

THE desecration of 85 Muslim graves at a cemetery in Hertfordshire in the UK is a distressing act that deserves the...