In a major relief to cash-strapped Pakistan, China has agreed to reschedule over $2 billion of its debt.
This rescheduling will be for a period of two years and will help the cash-starved government of Pakistan, which is currently focused on rebuilding its foreign exchange reserves through fresh loans.
The revised terms of the agreement between Islamabad and Beijing were approved by the Economic Coordination Committee (ECC) of the Pakistan Cabinet, chaired by Finance Minister Ishaq Dar, Express Tribune reported citing senior Pakistani officials.
Pakistan has constructed two nuclear power plants in Karachi, with a combined generation capacity of 2,117 megawatts.
These plants were built at a total cost of $9.5 billion, with China providing $6.5 billion in financing. The Export-Import (Exim) Bank of China extended the loan for this project.
Out of the total debt of $2 billion, over $625 million was scheduled to mature in the current fiscal year. However, China has agreed to pause these repayments.
Additionally, the remaining $6.5 billion is a publicly guaranteed debt, with over $2 billion repayments maturing in the next two years. China has reportedly also agreed to pause these repayments.
The Pakistani Ministry of Finance did not officially make a statement about the ECC's approval to the revised agreement with China.
China has consistently assisted Pakistan in meeting its debt obligations by providing new loans and extending the existing debt.
In June, China took the initiative to refinance Pakistan's $1.3 billion commercial loans ahead of schedule, which prevented Pakistan from defaulting on its international debt obligations, especially during the period when the International Monetary Fund program was stalled.
With the signing of the new IMF program, Pakistan's gross official foreign exchange reserves have seen a significant improvement. The reserves have increased from a critically low level of $4.5 billion to $8.7 billion.
Pakistani Prime Minister Shehbaz Sharif had previously said that China rolled over more than $5 billion in loans.
As you are no doubt aware, Swarajya is a media product that is directly dependent on support from its readers in the form of subscriptions. We do not have the muscle and backing of a large media conglomerate nor are we playing for the large advertisement sweep-stake.
Our business model is you and your subscription. And in challenging times like these, we need your support now more than ever.
We deliver over 10 - 15 high quality articles with expert insights and views. From 7AM in the morning to 10PM late night we operate to ensure you, the reader, get to see what is just right.
Becoming a Patron or a subscriber for as little as Rs 1200/year is the best way you can support our efforts.