China rolls over nearly $2 billion loan to Pakistan

China has rolled over around $2 billion loan for Pakistan, which will be crucial in helping the country fulfil its funding gap for the current fiscal year, a key condition of the International Monetary Fund (IMF).

Sources informed Nukta that the rolled over loan was set to mature on March 24.

The loan has been rolled over for one year, the sources said. It carries an interest rate of 7% per annum, they added.

Pakistan has received around $9 billion in foreign assistance from friendly countries, including China, Saudi Arabia and the UAE, this fiscal year which has helped strengthen its foreign exchange reserves. The latest rollover would further strengthen the foreign exchange reserves and support domestic currency.

The State Bank of Pakistan aims to increase the foreign exchange reserves to $13 billion by June-end. Currently, the country's foreign exchange reserves stand around $11.250 billion as per the week ended Feb 28.

The IMF team, in meetings held over the last week, has shown satisfaction over the reforms and measures taken by the government. If the talks on the first review of the $7 billion loan review are successful, Pakistan will receive the next tranche of $1 billion.

The IMF approval will also pave the way for another $1 billion funding from the Asian Development Bank, the World Bank, the International Finance Corporation and the Asian Infrastructure Bank, sources said.