China Issues Loan to Pak with Terms Unchanged


Islamabad: China has consented to extend the term of a USD 2 billion loan to Pakistan on its current conditions, as per the report by a news source on February 28.

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As per the details, the loan will now be subject to a postponement, pending formal confirmation from the Finance Ministry, after China’s informal indication of extending the repayment schedule.

Originally, China had proposed a higher interest rate for the loan, differing from the current 7.1%, which is calculated based on the 6M Secured Overnight Finance Rate (SOFR) plus 1.715%. Responding to this, Caretaker Prime Minister Anwar Haq Kakar formally sought a one-year extension for the repayment of the USD 2 billion loan in a letter addressed to Chinese Prime Minister Li Keqiang in January.

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Out of the USD 4 billion in deposits received from China, USD 2 billion is due for maturity on March 23, 2024, prompting Pakistan’s request for an extension. This decision is significant in providing Pakistan with essential fiscal manoeuvrability.


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