Islamabad:

In a significant development, China has again extended the deadline for the $ 2 billion loan that Pakistan owes another year. The debt was originally set to mature on March 24.

The Ministry of Finance confirmed the development of the Express Pakinomist and said this expansion will help Pakistan strengthen its currency reserves. The continued financial support of China, Pakistan’s long -time friend, is crucial to the country’s economic stability and improvement, they added.

“China rolled over a $ 2 billion loan to Pakistan,” the Minister of Finance, Khurram Schehzad, also told Reuters in a SMS Saturday.

Pakistan is working to strengthen his economy after securing an international monetary fund of $ 7 billion (IMF) in September 2024. The first installment of the loan is currently undergoing review and if successful, Pakistan will receive an additional $ 1 billion.

Securing external funding has previously been an important condition for the IMF to approve of Bail-Out agreements for the cash tape nation. Pakistan has to repay over $ 22 billion in external debt in the 2025 financial year, including nearly $ 13 billion in bilateral deposits, Fitch said.

China had rolled over the loan for a year in February last year on existing terms after originally sought a price increase. China has been an important financial partner for Pakistan, providing financial assistance and investment, especially under China -Pakistan Economic Corridor (CPEC) initiative.

The expansion is coming as Pakistan continues to navigate financial challenges, including a balance of the payment crisis and ongoing conversations with international lenders to ensure further financial assistance.

Officials said the postponement of the loan will facilitate immediate repayment pressure as the government focuses on stabilizing the economy. Earlier this week, Pakistan and IMF officially began discussions for the first review of the extended fund facility (EFF), which was secured last year.

According to the Ministry of Finance, the IMF delegation, led by Nathan Porter, met with Finance Minister Muhammad Aurangzeb in Islamabad. The meeting focused on the overall financial situation in the country.

During the meeting, Pakistan assured the global lender about his commitment to fiscal discipline and financial reforms as negotiations continue in Islamabad for the latest economic review.

Finance Minister Aurangzeb informed the IMF delegation on the country’s macroeconomic situation, revenue collection and progress with structural reforms. He reiterated that Pakistan remains obliged to fulfill the conditions of his $ 7 billion loan program.

The successive governments have failed to tap non-debt-creating influxes that have exposed the country to various risks. Exports are growing at a pace that is not enough to finance imports. The foreign direct investment remains dry and stagnant.

Rolling over a loan means extending the term for an existing loan instead of repaying it fully when it is due. This is usually done by negotiating new conditions with the lender – effective refinancing of the loan – so that the borrower can continue to use the funds while delaying full repayment.

With input from Reuters and News Desk