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

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 totaling $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, reported Reuters.

Chinese EXIM Bank has rolled over for 2 years principal amounts of following loans totalling US$ 2.4 billion which are due in next 2 fiscal years:

FY2023-24: US$1.2 billion
FY2024-25: US$ 1.2 billion

Pakistan will make interest payments only in both years.

— Ishaq Dar (@MIshaqDar50) July 27, 2023

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.

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.

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