CHINA has granted Pakistan a two-year rollover on a US$2.4 billion (RM10.8 billion) loan, Islamabad said today, 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 US$3 billion International Monetary Fund (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 US$1.2 billion that had been due in the fiscal years 2023/24 and 2024/25.

“Pakistan will make interest payments only,” Ishaq said on Twitter.

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

State forex reserves have rebounded to US$8.7 billion 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, July 27, 2023.