Pakistan struggling to pay its debts to China

PESHAWAR – Chinese debts are squeezing Pakistan’s pinched finances as external payments are set to balloon to US$14 billion at the end of this financial year. Nearly half is owed to Chinese commercial banks, largely for Belt and Road Initiative (BRI) related projects.

Observers say Islamabad needs to ask Chinese financial authorities to reschedule its debts to ease pressure on the State Bank of Pakistan – whose foreign reserves fell to US$17 billion in October – and avoid default.  

The warning signs have been apparent for months. In April, the International Monetary Fund warned that policy slippage and mounting contingent liabilities were undermining Pakistan’s public debt sustainability.

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