China, Saudi Arabia likely to roll over $9b loans

ISLAMABAD:

In this fiscal year, China and Saudi Arabia are likely to roll over $9 billion loans to Pakistan.

Sources from the Ministry of Economic Affairs said Pakistan is also seeking funding for the Diamer Bhasha Dam. They said Pakistan is expecting a $500 million facility from the Islamic Development Bank for oil and goods. However, it is unlikely that Saudi Arabia will extend another oil loan facility.

The sources said Pakistan faces total payments of more than $20.8 billion this year.

The Geneva Donor Conference had pledged $10.7 billion in 2023, but only $3 billion have been received so far. Pakistan is also trying to secure financing based on the pledges made at the Donor Conference.

Pakistan expects $1 billion from the World Bank for the Dasu Hydropower Project, while the Asian Infrastructure Investment Bank (AIIB) will provide financing for the N-5 project.

A loan rollover occurs when a borrower extends the maturity date of an existing loan by obtaining a new loan, either from the same lender or a different one, to pay off the original loan.

This can help the borrower avoid defaulting on the loan, but it may come with additional costs and potentially higher interest rates. Loan rollovers are common in various types of financing, including personal loans, business loans, and government debt.