Finance Minister Ishaq Dar revealed on Thursday that China had provided Pakistan with a financial boost by extending a loan worth $2.4 billion for two years. The move aims to strengthen Pakistan’s economic stance and escalate its foreign reserves, especially after the recent International Monetary Fund (IMF) deal.
In his statement released on X, the platform that replaced Twitter, Dar explained, “The Chinese Exim Bank has agreed to roll over the principal amounts, totalling $2.4 billion, due in the next two fiscal years.” This arrangement will require Pakistan to make only interest payments during this period.
A Series of Financial Backing for Pakistan
This loan extension comes on the heels of a similar financial backing from China just over a week ago, as acknowledged by Pakistan’s Prime Minister Shehbaz Sharif. China had granted a loan of $600 million, thereby fortifying Pakistan’s foreign exchange reserves.
This is not the first time China has come to Pakistan’s rescue. In the past three months alone, China has rolled over loans exceeding $5 billion, assisting Pakistan to avoid a potential default. This happened during the prolonged negotiations to secure a bailout from the IMF.
Finally, on June 30, the IMF agreed to a $3 billion bailout for Pakistan, immediately disbursing an initial upfront payment of $1.2 billion. Further financial aid followed from Saudi Arabia and the UAE, contributing $2 billion and $1 billion, respectively.
Last week, the central bank confirmed a rise in foreign exchange reserves by $4.2 billion, bringing the total to $8.7 billion as of July 14.
