China has granted Pakistan an extension of time to repay a $2 billion loan. Pakistan Day, March 23, was the deadline for repaying this loan. China appears to have chosen to lengthen the loan’s repayment duration over its initial desire to increase interest rates.

Officials from the Ministry of Finance have reached an agreement with Beijing and are awaiting word from the Chinese embassy. Last month, Anwaarul Haq Kakar, the acting prime minister of Pakistan, asked China to prolong the loans.

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Pakistan paid China, Saudi Arabia, and the United Arab Emirates a substantial sum of interest the previous fiscal year, amounting to Rs26.6 billion. This sum grew by 118% over the prior year as a result of currency devaluation.

Although Pakistan has $8 billion in its official foreign exchange reserves, in hard economic times, it has borrowed from neighboring countries. Repayment of this rising debt is becoming more difficult.

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