In a major development for Pakistan's struggling economy, China has agreed to extend a $2.4 billion loan for a period of two years. The loan rollover, announced by Pakistan's finance minister, Ishaq Dar, through the messaging platform X (formerly known as Twitter), is aimed at helping the country overcome its severe economic crisis.

This extension comes as a relief to Pakistan, as its foreign exchange reserves are currently only enough to cover two months' worth of import bills.

The principal amounts of the $2.4 billion loan, which Pakistan was originally scheduled to repay in 2024 and 2025, have been rolled over by the Chinese EXIM Bank for two years. Under the new agreement, Pakistan will only be required to pay interest on the loans during this period.

This move is seen as a testament to China's commitment as a long-term ally and major investor in Pakistan's development. China's support for Pakistan has been crucial in helping the country avoid defaulting on its debt obligations.

In recent months, China has either rolled over or granted new loans worth approximately $5 billion to Islamabad. This aid comes as negotiations with the International Monetary Fund (IMF) dragged on for eight months. In addition, Pakistan also received a billion-dollar package from the IMF, which significantly boosted its foreign exchange reserves.

Pakistan's relationship with China is further strengthened through the China-Pakistan Economic Corridor (CPEC), a comprehensive package of infrastructure projects and investments. China has already invested billions of dollars in Pakistan as part of the Belt and Road Initiative (BRI).

The CPEC is considered a lifeline for Pakistan's economy, providing much-needed support for sectors such as road construction, power plants, and agriculture. While there have been concerns about Pakistan's growing debt to China, the government dismisses claims that it is trapped in a debt crisis.

Rather, it views China's support as instrumental in overcoming economic challenges and promoting development. The loan rollover is seen as a testament to the strong friendship and economic cooperation between the two countries. As Pakistan prepares for new parliamentary elections next month, the loan extension provides a boost to the outgoing government led by Prime Minister Shehbaz Sharif.

Sharif, who has blamed alleged corruption under former Prime Minister Imran Khan for Pakistan's economic downturn, is expected to step down next month. The loan rollover offers some economic stability during this transitional period.