Washington DC September 3 2022: About 30% of Pakistan’s foreign debt is owed to China, including state-owned commercial banks, compared with 27% in February, according to a report released by the International Monetary Fund on Thursday.
Chinese debt to Pakistan has been revised upwards by $4.6 billion to about $30 billion, the IMF report said, from $25.1 billion in February. Chinese support is triple the amount of IMF debt and more than the amount given by either the World Bank or the Asian Development Bank.
The debt shows that China is now playing a similar role to the IMF by providing financing during balance of payments crises, rather than World Bank-style concessionary-project financing. Debt for balance of payments support from China has continued with loans to Pakistan being rolled over on a regular basis.
Pakistan secured a bailout from the IMF this week to avert an imminent default, with additional support from friendly nations. China has rolled over more than $4 billion in loans, while Arab nations including Saudi Arabia have committed $9 billion in investment and loans.
Pakistan’s external debt is low, predominantly held by the public sector and mainly sourced from concessional multilateral and bilateral sources, the central bank said in a presentation it made in July. The country’s foreign loans are 36% of its total debt.