According to a media report on Saturday, Pakistan has approached China with a request to postpone the repayment of a $3.4 billion loan for two years to help address a foreign funding shortfall highlighted by the International Monetary Fund.

This marks the second instance in the past five months that Islamabad has sought a loan rescheduling from China’s Exim Bank.

Deputy Prime Minister Ishaq Dar formally requested his visit to Beijing this week, as reported by The Express Tribune, citing government sources.

Officials stated that Pakistan has asked the Export-Import (Exim) Bank of China to restructure loan repayments between October 2024 and September 2027.

Pakistan has requested a two-year extension to repay both official and guaranteed loans taken from the Exim Bank while continuing to make interest payments.

According to sources, Pakistan needs to secure funding sources to bridge a $5 billion external financing gap over the three-year program period.

They also mentioned that Chinese authorities have responded positively, and there is hope that Beijing will approve the request to ease Pakistan’s external financial burden.

Previously, in September last year, Finance Minister had formally approached the Exim Bank with a request for debt rescheduling.

A joint statement issued by China and Pakistan on Thursday highlighted Pakistan’s deep appreciation for China’s continued support in maintaining its financial and economic stability. The statement followed President Asif Ali Zardari’s official visit to Beijing.

The $3.4 billion debt, initially set to mature between October 2024 and September 2027, aligns with the three-year duration of Pakistan’s IMF program. Sources indicate that the loan consists of two categories: direct lending to the government and guaranteed loans to State-Owned Enterprises (SOEs) by the bank.

The debt rescheduling is crucial for Pakistan, forming a key component of the country's $5 billion external financing plan. This plan was designed to bridge the financial gap identified by the IMF during the approval of Pakistan’s bailout package in September of the previous year.

Between October 2024 and September 2025, approximately $505 million in direct loans from China’s Exim Bank to the Pakistani government are due for repayment. This period coincides with the first two reviews of Pakistan’s IMF program.

Between October 2025 and September 2027, an additional $1.7 billion in direct loans to the Pakistani government is set to mature, bringing the total amount of direct lending requiring a two-year extension to $2.2 billion.

Meanwhile, China’s $1.2 billion in loans to state-owned enterprises (SOEs) is also due for repayment between October 2024 and September 2027, with a significant portion maturing in October this year.

If Pakistan does not reimburse the $3.4 billion debt, it will reduce its external financing gap by the same amount. To manage its financial situation, the government recently secured a $1.2 billion oil facility from Saudi Arabia and obtained a $300 million loan through United Bank Limited to help bridge the overall financing gap.

Pakistani authorities have already conducted multiple meetings regarding restructuring the $3.4 billion debt and shared relevant data with the Exim Bank.

Pakistan’s financial stability relies heavily on China, which continues to provide crucial support by rolling over $4 billion in cash deposits, extending $6.5 billion in commercial loans, and maintaining a $4.3 billion trade financing facility.

Meanwhile, Fitch Ratings, a leading global credit rating agency, stated on Friday that securing adequate external financing remains a significant challenge for Pakistan due to large debt maturities and lenders’ existing commitments.

The agency also noted that Pakistan has allocated approximately $6 billion in funding from multilateral institutions, including the IMF, for this fiscal year. However, nearly $4 billion will be used to refinance its debt.