China has rolled over a $2 billion loan to Pakistan, according to Adviser to the Finance Minister Khurram Schehzad. The extension comes as Pakistan works to strengthen its financial position following a $7 billion bailout from the International Monetary Fund (IMF) secured in September 2024.

The first installment of the IMF loan is currently under review. A successful review would allow Pakistan to receive an additional $1 billion. Securing external financing has been a standard requirement for the IMF to approve bailout packages for Pakistan in the past.

Pakistan faces significant debt obligations in the 2025 fiscal year. According to Fitch, the global credit rating agency, the country needs to repay over $22 billion in external debt this year, with nearly $13 billion in bilateral deposits.

The World Bank's International Debt Report, released in December, identifies China as Pakistan's largest creditor. Chinese loans to Pakistan total almost $29 billion, representing 22% of Pakistan's total external debt.

Pakistan's total external debt stood at $130.85 billion in 2023, according to the World Bank. This represents 352% of Pakistan's total exports and 39% of its gross national income (GNI). The country's debt servicing costs amount to 43% of total exports and 5% of GNI.

Major creditors to Pakistan include:

• China: $28.786 billion (22% of total debt)
• World Bank: $23.55 billion (18%)
• Asian Development Bank: $19.63 billion (15%)
• Saudi Arabia: $9.16 billion (7%)

The loan extension reflects the ongoing economic challenges Pakistan faces as it attempts to manage its substantial debt obligations while working with international financial institutions to stabilize its economy.

The Chinese loan rollover to Pakistan occurs as Beijing recently announced new fiscal and monetary stimulus measures targeting 5% GDP growth this year. China faces its own economic challenges including weak domestic consumption, property market troubles, and increasing US trade tensions.