China agrees to reschedule Pakistan’s $2 billion debt

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China has agreed to give Pakistan an additional two years to repay its over $2 billion in publicly guaranteed debt.

This was approved by the federal cabinet’s Economic Coordination Committee (ECC) at a meeting on Thursday. The committee reviewed and later accepted the modified terms of the agreement reached between Pakistan and China under the direction of Finance Minister Ishaq Dar, according to the Express Tribune.

A while back, the Export-Import (Exim) Bank of China committed to contributing to the $9.5 billion financing of two nuclear power reactors in Karachi. Senior authorities claim that the $6.5 billion loan is publicly guaranteed and that China has agreed to defer the roughly $2 billion payback obligation that is due in two years.

As of yet, there has been no formal announcement from the Ministry of Finance about the ECC’s acceptance of the new agreement with China.

According to the International Monetary Fund’s most recent Country Report, China has been Pakistan’s single-largest savior among bilateral and commercial creditors that have provided sizable loans to the country thus far, contributing $23.87 billion bilaterally and $5.71 billion commercially.

At the end of December 2022, Pakistan’s external debt stock was valued at $100.52 billion, of which $29.59 billion was funded by China.