China has consented to keep Pakistan’s $2 billion loan maturing under its current conditions.
The $2 billion debt, which matures on March 23, 2024, contains an agreement to postpone payment, according to the Express Tribune. China has indicated informally that it will continue to prolong the amortization, and the Ministry of Finance will not issue a circular until it receives a formal response.
It is important to note that China had originally asked for a higher interest rate on the total, as opposed to the current 7.1% interest rate, which is determined by adding 1.75% to the 6M Secured Overnight Finance Rate (SOFR).
In January, Caretaker Prime Minister Anwar Haq Kakar wrote a letter to Chinese Prime Minister Li Keqiang requesting an extension in the repayment of the $2 billion loan by one year.
Out of the $4 billion in deposits received from China, $2 billion will mature on March 23, 2024, as mentioned earlier. Pakistan was seeking a one-year extension on the repayment. The decision to extend the maturity of the loan will be instrumental in providing Pakistan with the necessary fiscal flexibility.
The United Arab Emirates last month also rolled over two deposits of $1 billion each for one more year.
