KARACHI: China has rolled over $3.4 billion in loans to Islamabad, which together with other recent commercial and multilateral lending will boost Pakistan’s foreign exchange reserves to $14 billion, a finance ministry source said on Sunday.
Beijing rolled over $2.1 billion, which has been in Pakistan’s central bank’s reserves for the last three years, and refinanced another $1.3 billion commercial loan, which Islamabad had paid back two months ago, the source said.
Another $1 billion from Middle Eastern commercial banks and $500 million from multilateral financing have also been received, he said.
“This brings our reserves in line with the IMF target,” he said.
The loans, especially the Chinese ones, are critical to shoring up Pakistan’s low foreign reserves, which the IMF required to be over $14 billion at the end of the current fiscal year on June 30.
Pakistani authorities say that the country’s economy has stabilised through ongoing reforms under a $7 billion IMF bailout.
In March, China extended the deadline for the $2 billion loan owed by Pakistan by another year. “China rolled over a $2 billion loan to Pakistan,” the adviser to the finance minister, Khurram Schehzad, also told Reuters.
Rolling over a loan means extending the term of an existing loan instead of repaying it in full when it comes due. This is usually done by negotiating new terms with the lender effectively refinancing the loan so that the borrower can continue to use the funds while delaying full repayment.
