Pakistan has again requested China to re -plan $ 3.4 billion debt for two years to bridge a foreign funding gap identified by the International Monetary Fund – in a step that is successful will largely treat the external financing problems , before the upcoming program review interviews.

Deputy Prime Minister Ishaq Dar made the formal request during this week’s visit to Beijing, according to the government sources. They said the Chinese authorities were positive and hopefully Beijing would accept the request to reduce Pakistan’s external financing wings.

Pakistan requested export imports (Exim) Bank of China to consider the re-arrangement of its loan to be due from October 2024 to September 2027, the government officials said. They said Pakistan was obliged to identify sources of financing to fill the external $ 5 billion funding gap during the three -year program period.

This is the second time that Pakistan made a request to China in the last five months to re -plan $ 3.4 billion debt delivered by his Exim bank. Earlier, last September, the Finance Minister had written to Exim Bank and requested re -planning.

According to a joint China-Pakistan statement issued on Thursday, the Pakistani side repeated its high appreciation of China’s valuable support for Pakistan’s fiscal and economic stability. The declaration was issued at the end of President Asif Ali Zardari’s state visit to Beijing.

The $ 3.4 billion debt matures between October 2024 and September 2027-as coincided with the three-year IMF program period. The bank has provided two types of loan-the loan and the guaranteed lending to state-owned companies, the sources said.

It is said that the re -planning is critical for Pakistan, and it is part of the total external funding plan of $ 5 billion, which Pakistan has to implement to bridge, identified by the IMF at the time of signing the Bailout package in September Last year.

Pakistan has sought a two-year extension of repayment of the official and guaranteed debt obtained from Chinese Export Import (Exim) Bank. The country would continue to make interest payments.

From October 2024 to September 2025, the direct loans of $ 505 million would mature – the period that will cover the first two reviews of the IMF program. Then from October 2025 to September 2027, another $ 1.7 billion would be worth directing of direct loans to the government. This brings the total direct loan that requires a two-year expansion to $ 2.2 billion.

China’s $ 1.2 billion loan for SOES also matures from October 2024 to September 2027, and most of them mature from October this year.

In July 2023, the then Finance Minister and now Vice Prime Minister Ishaq Dar had announced the $ 2.43 billion worth 31 loans re -planned by China for two years. DAR had said that the Chinese Exim Bank had rolled over in two years’ main amount of loans totaling $ 2.4 billion, from July 2023 to June 2025. Pakistan only made interest payments of the $ 2.4 billion re -planned debt.

In the event that Pakistan does not repay debt of $ 3.4 billion, its external financing gap would reduce with the same amount. This week, the government also secured a Saudi oil facility of $ 1.2 billion and took a $ 300 million loan through United Bank Limited to bridge the overall financing gap.

Pakistani authorities have already held at least a few meetings on the issue of $ 3.4 billion debt structure and exchanged the data with the Exim bank.

Pakistan’s first formal review of the $ 7 billion program is expected to begin from the first week of March, and its successful conclusion will pave the way for the release of the next loan tan for $ 1 billion.

Pakistan is highly dependent on Beijing to remain fluid, the friendly nation that is constantly rolling over the $ 4 billion cash deposits, $ 6.5 billion for commercial loans and $ 4.3 billion trade financing facility.

Fitch Ratings, one of the three global credit rating agencies, said Friday that securing adequate external funding remains a challenge for Pakistan considering major maturities and lenders existing exposures.

It added that Pakistan budgeted about $ 6 billion funding from multilateral, including the IMF, for this financial year, but about $ 4 billion of this will effectively refinance the existing debt.

The request for $ 3.4 billion is in addition to a new $ 1.4 billion loan that Finance Minister Muhammad Aurangzeb requested during his interaction with the Chinese Vice Finance Minister of Washington.

Aurangzeb had requested China to raise the borders according to the Monetary Contact to CNY 40 billion. Pakistan has already spent the existing 30 billion CNY, or $ 4.3 billion, Chinese trade facility to repay his debt and is now seeking to raise this limit with a further CNY 10 billion that translates to $ 1.4 billion at the current exchange rate .

It is not clear whether China has entertained the new request of $ 1.4 billion or not.

Fitch stated that Pakistan has continued to make progress in restoring financial stability and rebuilding external buffers. But progress with difficult structural reforms will be a key to upcoming IMF program reviews and continued financing from other multilateral and bilateral lenders.

It predicted that the foreign reserves are set to exceed the goals of the IMF program and Fitch’s previous forecasts.

But the currency reserves remain low in relation to financing needs. Over $ 22 billion public external debt matures in this financial year, including nearly $ 13 billion in bilateral deposits, Fitch said. It believed that the bilateral partners will roll according to their promises to the IMF. Saudi -Arabia already rolled over $ 3 billion in December and UAE $ 2 billion in January.