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Beijing commits to help Pakistan meet two crucial debt repayments in June worth $2.3 billion

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Aqsa Younas Rana
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Pakistan Looks to China for Debt Rollover as IMF Loan Hangs in the Balance. Image Credit: Pakistan Politico

China Commits to Assisting Pakistan with Debt Repayments:

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Pakistan, facing a critical pending loan from the International Monetary Fund (IMF), is turning to its ally China for support. As the nation grapples with a debt of over $2 billion due next month, it is also burdened with approximately $3.7 billion in overseas debt this month and in June. With foreign exchange reserves of just $4.3 billion, Pakistan is exploring options to meet its repayment deadlines.
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Chinese Support Alleviates Immediate Default Risks:

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In a positive development, Chinese officials have assured Pakistan of their commitment to help the country meet two significant debt repayments due in June. Fresh funds are expected to be provided by China immediately after Pakistan makes the payments. The refinancing of commercial loans worth $1.3 billion and a Chinese government loan of $1 billion would help Pakistan avert immediate default, providing much-needed relief to the cash-strapped nation.
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Pakistan's Economic Crisis and the Importance of IMF Assistance:

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Pakistan finds itself in one of the worst economic crises in its history, heavily reliant on lenders like the IMF and China to finance its budget deficits. With shrinking foreign exchange reserves and soaring inflation, the country's ability to sustain its balance of payments is in jeopardy. As Pakistan seeks to recover from devastating floods and address its mounting debt obligations, analysts emphasize the crucial role of an IMF deal in restoring investor confidence and unlocking further financing from international partners.
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