• Wednesday, May 29, 2024

Business

China grants Pakistan rollover on $2.4 billion loan

The move sends the Pakistan Stock Exchange’s benchmark index to a 20-month high

Pakistan finance minister Ishaq Dar (Photo by SHAUN TANDON/AFP via Getty Images)

By: Chandrashekar Bhat

CHINA has granted Pakistan a two-year rollover on a $2.4 billion loan, Islamabad said Thursday (27), giving the debt-saddled nation breathing space in its balance-of-payments crisis.

Soaring inflation, shrinking dollar reserves and crippling foreign debt led Pakistan to the brink of default before a pivotal $3 bn IMF bailout was granted earlier this month.

Securing supplemental backing from friendly nations was a key condition for the global lender granting further support to Pakistan.

Finance minister Ishaq Dar said China’s EXIM Bank had rolled over for two years principal amounts on twin debts of $1.2 bn that had been due in the fiscal years 2023/24 and 2024/25.

“Pakistan will make interest payments only,” Dar said on Twitter, recently renamed “X”.

The United Arab Emirates and Saudi Arabia topped up Pakistan’s forex reserves by $3 bon before the IMF standby deal was confirmed.

State forex reserves have rebounded to $8.7 bn after reaching such a low ebb that imports were heavily restricted and local industry was hobbled.

The rollover sent the Pakistan Stock Exchange’s benchmark index to a 20-month high after a prolonged bearish trend.

“News of the Chinese loan rollover added to the post-IMF agreement sentiments,” said Sunny Kumar, a financial analyst at Topline Securities.

“Yet full recovery of the economy is a long way ahead.”

(AFP)

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