ISLAMABAD, November 09 2024: Pakistan has formally requested China to reschedule an additional $3.4 billion worth of official and guaranteed debt for two years. This debt, which is due for repayment during the International Monetary Fund (IMF) program period, is pivotal to Pakistan’s ongoing financial stabilization efforts.
Government sources, speaking to The Express Tribune, emphasized the importance of the rescheduling request, which aims to ease the country’s fiscal pressure. With the IMF having identified a $5 billion external financing gap at the time of Pakistan’s bailout package signing in September, the move underscores Islamabad’s dependence on Beijing’s support to navigate the ongoing economic challenges.
Pakistan’s efforts to secure rescheduling are part of a broader strategy to address its immediate external financing needs and ensure stability throughout the IMF program. The request, if granted, would offer critical breathing room for Pakistan as it strives to meet its financial obligations without further exacerbating its economic woes.
The $3.4 billion debt rescheduling would allow Pakistan to defer repayments, giving the government more flexibility in managing its fiscal balance. This would also help the country avoid exacerbating its foreign exchange reserves crisis and mitigate the risks associated with its growing external debt.
The relationship between Pakistan and China, which has grown significantly in recent years due to the China-Pakistan Economic Corridor (CPEC), continues to be a key element in Islamabad’s financial strategy. China has been a longstanding ally, offering loans and investments in various sectors, including infrastructure and energy, as part of its Belt and Road Initiative (BRI).
As Pakistan seeks to stabilize its economy and meet the stringent conditions set by the IMF, the outcome of this debt rescheduling request will play a crucial role in determining its financial trajectory over the coming years.
