China agrees to reschedule $2 billion debt of Pakistan

China has agreed to reschedule more than $2 billion debt of Pakistan for a period of two years, providing a major relief to the cash-starved country.

China has agreed to reschedule more than $2 billion debt of Pakistan for a period of two years, providing a major relief to the cash-starved country, which is in the process of rebuilding foreign exchange reserves through fresh loans.

The Economic Coordination Committee (ECC) of the Cabinet, chaired by Finance Minister Ishaq Dar on July 20, approved the revised terms of the agreement reached between Islamabad and Beijing, according to senior Pakistani officials, the Express Tribune reported.

Pakistan has built two nuclear power plants in Karachi that have a combined generation capacity of 2,117 megawatts. The total cost of the plants is $9.5 billion, including the $6.5 billion financing from China. The loan was extended by the Export-Import (Exim) Bank of China.

“Of $2 billion, more than $625 million was maturing in this fiscal year that will now be paused. The $6.5 billion is a publicly guaranteed debt, and more than $2 billion repayments were maturing in two years that China has agreed to make a pause on,” according to senior officials.

The Ministry of Finance did not officially make a statement about the ECC’s stamp of endorsement to the revised agreement with China.

Data | Why is Pakistan’s economy collapsing? Explained in charts

China has, time and again, helped Pakistan meet its debt obligations through the provision of new loans and the rollover of the existing debt.