ISLAMABAD - China has agreed to rollover Pakistan’s loan worth $2.1 billion, due for payment within next two years, it is learnt reliably here.
The Economic Coordination Committee (ECC) of the Cabinet has approved the revised term the grace period of all 31 loan agreements (guaranteed+ central), contracted with China EXIM, Bank, are extended with 2 years from 21st July, 2023 to 30th June 2025, official source told The Nation.
An option of re-arrangement of scheduled payments of 32 loans (Guaranteed + Central), amounting to approximately $ 2.4 billion (Principal amount), due between the period July 2023 and June 2025, was taken up with the EXIM Bank, the source said.
The proposal contained extension of the maturity Period tenure of each loan, contracted with EXIM Bank, China, by two years as Grace Period. During the grace period, interest payment would be made to the EXIM Bank China, whereas, repayment of Principal amount would be deferred for two years.
The Bank, with, some minor amendments, expressed its willingness to agree to the proposal, and suggested that the grace period, interest, that the Government of Pakistan May take up the re-arrangement of 31 loans (excluding one syndicate loan) formally, with the Government of People’s Republic of China.
Meanwhile a formal request, was submitted to the Chinese Government. After formal request, the re-arrangement proposal was negotiated with the concerned authorities of the Chinese Government and EXIM Bank, China.
Formal approval of the Government of China had been conveyed to EAD by the EXIM Bank through its letter dated 17th July 2023, the source maintained. Economic Affairs Division had submitted a summary to ECC for the approval of the re-arrangement proposal.
As per the amendment approved by the ECC, the grace period of all 31 loan agreements (guaranteed+ central), contracted with China EXIM, Bank, are extended with 2 years from 21st July, 2023 to 30th June 2025. The Maturity Period will be extended with 2 years correspondingly. Similarly, it has also been approved that the repayment of principals due and payable during the 2-year grace period would remain deferred under the loan agreements.
The Government of Pakistan is obliged to pay interests accrued on the amount outstanding, during the 2-years grace period at the same interest rate set forth In the original loan agreements; and after the end of 2-years grace period, GoP is obligated to pay all the principal amount outstanding, all the interest accrued thereon and such other amount payable by Pakistan in accordance with the terms and conditions of the original loan agreements.