Beijing, February 8, 2025: Pakistan has formally requested China to reschedule $3.4 billion in debt for two years to address a $5 billion external financing gap identified by the International Monetary Fund (IMF) ahead of an upcoming programme review.
Deputy Prime Minister Ishaq Dar made the request during his visit to Beijing, with Chinese authorities reportedly responding positively. The request pertains to loans from the Export-Import (Exim) Bank of China, covering payments due between October 2024 and September 2027.
This marks Pakistan’s second request in five months for a rescheduling of Exim Bank loans. The country is seeking a two-year extension on repayments while continuing to make interest payments. The debt includes $2.2 billion in direct loans to the government and $1.2 billion in loans to state-owned enterprises (SOEs), the majority of which mature from October 2024 onward.
Pakistan has heavily relied on China to maintain financial stability, with Beijing consistently rolling over $4 billion in cash deposits, $6.5 billion in commercial loans, and a $4.3 billion trade financing facility.
In July 2023, China had previously rescheduled $2.4 billion in loans for two years, with Pakistan only making interest payments. Additionally, Pakistan has recently secured a $1.2 billion Saudi oil facility and a $300 million loan through United Bank Limited (UBL) to bridge the financing gap.
Pakistan’s first formal review of the $7 billion IMF programme is expected in March, and securing external financing is crucial for unlocking the next $1 billion loan tranche.
Global credit rating agency Fitch Ratings highlighted that while Pakistan has made progress in stabilizing its economy, securing sufficient external funding remains a challenge. Pakistan faces over $22 billion in external debt maturities this fiscal year, including $13 billion in bilateral deposits, though partners like Saudi Arabia and the UAE have already rolled over $5 billion.
Additionally, Pakistan has requested China to increase its currency swap agreement limit by CNY 10 billion ($1.4 billion), but it remains unclear whether Beijing has approved this request.
Pakistan’s ability to secure Chinese support and meet IMF conditions will be critical in navigating its ongoing economic challenges.
