China has agreed to extend the maturity of a $2 billion loan to Pakistan on existing terms.
An agreement has been made to delay payment of the $2 billion loan maturing on March 23, 2024, reported Express Tribune. China has unofficially conveyed its decision to further extend the amortization, and the Ministry of Finance is awaiting a formal answer before sending out a circular.
It bears mentioning that China had initially requested a higher interest rate on the sum, compared to the existing 7.1 percent interest based on the 6M Secured Overnight Finance Rate (SOFR) plus 1.715 percent.
In January, Caretaker Prime Minister Anwar Haq Kakar wrote a letter to Chinese Prime Minister Li Keqiang requesting an extension in the repayment of the $2 billion loan by one year.
Out of the $4 billion deposits received from China, $2 billion will mature on March 23, 2024, as mentioned earlier. Pakistan was seeking a one-year extension on the repayment. The decision to extend the maturity of the loan will be instrumental in providing Pakistan with the necessary fiscal flexibility.
The United Arab Emirates last month also rolled over two deposits of $1 billion each for one more year.