China’s decision to roll over a $2 billion debt to Pakistan signifies a strategic economic partnership between the two nations. This move extends the maturity date, originally set for March 23, 2024, by an additional year under the existing terms. Notably, the agreement includes an interest rate of less than 2 percent, showcasing China’s willingness to support Pakistan’s financial stability.
This extension follows a prior deferment in July 2023, when China deferred the $2 billion debt payment for two years and exempted Pakistan from additional interest payments during this period. Such gestures underscore the strong ties and cooperation between the two countries, with China playing a crucial role in aiding Pakistan’s economic resilience.
Pakistan’s total debt burden, reaching Rs 63,399 trillion by the end of November in FY2023-24, reflects the economic challenges faced during the tenure of the Pakistan Democratic Movement (PDM) and the caretaker government. The significant increase of over Rs 12.430 trillion in debt during this period emphasizes the importance of external support, particularly from strategic partners like China, to manage and alleviate fiscal pressures.
As both countries navigate global economic dynamics, this debt rollover aligns with broader geopolitical considerations and economic interests. China’s continued financial support to Pakistan not only contributes to the stability of the latter’s economy but also strengthens the bilateral relationship. The terms of the rollover, including the low-interest rate, demonstrate a commitment to fostering economic cooperation that benefits both nations in the long term.