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China has reportedly rolled over a $2 billion debt to Pakistan, according to Ministry of Finance sources, though there has been no official confirmation to this effect from either Islamabad or Beijing.
The decision followed a letter sent by interim Prime Minister Anwaarul Haq Kakar to his Chinese counterpart Li Qiang last month in which he urged Beijing to rollover a $2 billion loan for a year. Set to mature on March 23, the loan was secured for a 7.1 percent interest rate. In his letter, Kakar thanked the Chinese government for its financial support to Pakistan, stressing the loan was granted during a “difficult” economic situation.
Such loans, kept in a safe deposit, aim to shore up Pakistan’s foreign exchange reserves, which currently stand at roughly $8 billion. According to the sources, Pakistan was granted deposits of $9 billion by China, Saudi Arabia and the United Arab Emirates, against which it paid Rs. 26.6 billion in the last fiscal year.
China had, last year, similarly rolled over more than $2 billion in debt.
Earlier, reports had emerged that the central bank was working to secure funds to repay China’s loan, raising fears of a looming currency devaluation due to the high value of the dollar outflows.