Islamabad March 30 2023: China is working on a request by Pakistan to roll over a $2-billion loan that matured last week, a top finance ministry official told Reuters.
The rollover is critical for the South Asian nation, as its foreign exchange reserves have dipped to just four weeks worth of imports at a time when it is locked in talks with the International Monetary Fund (IMF) to secure bailout funds.
“It is a work in progress,” the official said in a text message on Wednesday, on condition of anonymity. “Formal documentation is underway.”
A formal announcement will be made, the source added, but gave no further details. The loan matured on March 23.
As Pakistan struggles to avert a default on its obligations, the only help so far has come from longtime ally Beijing, through a refinancing of $1.8 billion already credited to Pakistan’s central bank.
The IMF funding is critical for Pakistan to unlock other external financing avenues, and the two have been negotiating since early February to resume $1.1 billion in funding held since November, part of a $6.5 billion bailout agreed in 2019.
One of the lender’s last remaining conditions for release of the tranche is securing an assurance on external financing to fund Pakistan’s balance of payments.
