Pakistan, which is currently struggling to avoid bankruptcy, successfully extended the loan agreement with China.
As per reports, China owes Pakistan a loan of $2 Billion which was expected to return by March 2024. The caretaker Government of Pakistan wrote a letter to the Chinese premier asking for an extension of the period since Pakistan is going through a financially difficult time and debt return at this time might raise issues for the State Bank of Pakistan. Pakistan is already on the verge of bankruptcy since there are insufficient foreign reserves and Pakistan is continuously applying for debt from IMF, World Bank, and other Allies.
Initially, China had asked for a rise in the interest rate. However, after negotiation, China agreed to extend the loan with the previously agreed terms. The actual agreement and its terms have not been disclosed so far.
Pakistan also has a series of ongoing ground projects with China. CPEC (China-Pakistan Economic Corridor) will provide China with a ground route to the Gawadar Port.
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According to analysts, this is not a wise step by Pakistan. The Government should focus more on financial problems and repaying debt rather than trying to extend the period or asking for relations.
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