Pakistan Urges China To Reschedule Debt Worth $3.4 Billion Again: Report

Pakistan has reportedly sought a 2-year extension to repay the official and guaranteed debt taken from the Exim Bank. In the meantime, it will continue making the interest payments.

According to the IMF norms, Pakistan is required to find out financing sources to cover the external financing gap worth $5 billion for the three-year programme period.

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Pakistan has reportedly requested China to reschedule the $3.4 billion debt for two years, The Express Tribune reported on Saturday. The request has been placed to help bridge a foreign funding gap identified by the International Monetary Fund (IMF), the report said.

This is the second time in the last five months that Pakistan has asked the Chinese authorities to reschedule the loans provided by its Exim bank, reported PTI. The request was formally made by Deputy PM Ishaq Dar during the visit to China this week. 

The Pakistani media agency citing official sources said that the officials requested the Export-Import (Exim) Bank of China to reschedule the arrangement of its loans from October 2024 to September 2027. 

The government sources noted that Pakistan sought a two-year extension to repay the official and guaranteed debt taken from the Exim Bank. In the meantime, Pakistan will continue making the interest payments, the report said.

According to the IMF norms, Pakistan is required to find out financing sources to cover the external financing gap worth $5 billion for the three-year programme period. The sources reported that the Chinese government was positive and hopefully accepts the request to help lessen Pakistan’s external funding woes.

Earlier this week on Thursday, China and Pakistan issued a joint statement, wherein, the latter expressed its high appreciation for support from the Chinese authorities towards its financial stability. 

As per sources, the rescheduling is extremely important for Pakistan and is part of its overall $5 billion external financing plan that it needs to put in place to fill the gap identified by the IMF at the bailout package signing last year in September.

Between October 2024 to September 2025, the Exim direct loans worth $505 million would mature. This period also covers the first two reviews of the IMF programme. Then, from October 2025 to September 2027, another branch of direct loans worth $1.7 billion to the government would mature, bringing the overall direct lending in need of a two-year extension to $2.2 billion.

Notably, the bank has disbursed two types of loans, direct lending and guaranteed lending to state-owned enterprises (SOEs). China’s loans worth $1.2 billion to SOEs are also maturing from October 2024 to September 2027, majority of which are maturing in October this year. If Pakistan fails to repay the debt of $3.4 billion, its external financing gap will be slahed by the same amount, the report noted.