As Pakistan grapples with an unprecedented debt crisis, it has increasingly turned to its long-time ally China for financial assistance. Pakistan owes nearly $30 billion to China, which accounts for 23% of its total external debt. In recent months, Islamabad has been seeking to roll over Chinese loans and secure additional funding to ease the pressure on its economy.
China has so far provided some relief by extending short-term loans and facilitating the rollover of previous loans. However, the sustainability of Pakistan’s debt to China has raised concerns among economists. The increasing reliance on Chinese credit, coupled with high-interest rates, could further exacerbate Pakistan’s debt problem.
Despite these concerns, Pakistan remains committed to strengthening its ties with China. Chinese investments, especially under the China-Pakistan Economic Corridor (CPEC), continue to play a crucial role in Pakistan’s economic development. However, experts warn that without better financial management, Pakistan may face difficulties in meeting its debt obligations to both China and other international creditors.
Pakistan’s leaders are engaged in balancing the financial challenges with the need to maintain positive relations with its key ally. The upcoming negotiations with China are likely to shape the country’s economic outlook for the foreseeable future.
