China Extends $2B Loan Repayment, Major Relief for Pakistan

China has agreed to extend the repayment deadline for a $2 billion loan to Pakistan by one year, offering major financial relief, as confirmed by the Ministry of Finance on Saturday.

The loan, which was originally due on March 24, has been postponed to help Pakistan stabilize its struggling economy.

According to the ministry, this extension will strengthen Pakistan’s foreign exchange reserves and enhance financial stability. China has been a key economic ally, consistently providing financial aid and investments, particularly through the China-Pakistan Economic Corridor (CPEC).

This loan deferral comes at a critical time, as Pakistan faces severe economic challenges, including a balance of payments crisis and ongoing talks with global lenders for additional financial support. Officials believe that postponing the repayment will ease short-term financial strain, allowing the government to focus on economic recovery.

Meanwhile, Pakistan and the International Monetary Fund (IMF) have initiated the first review of the $7 billion Extended Fund Facility (EFF), signed last year. Led by Nathan Porter, the IMF delegation met with Finance Minister Muhammad Aurangzeb in Islamabad to discuss Pakistan’s economic performance, revenue generation, and ongoing structural reforms.

During the meeting, Pakistan reaffirmed its commitment to maintaining fiscal discipline and complying with IMF conditions under the loan agreement.