According to a report released by the International Monetary Fund on Thursday, 30% of Pakistan’s foreign debt is owed to China, including state-owned commercial banks, compared with 27% in February.
According to the IMF report, China’s debt to Pakistan increased by $4.6 billion to $30 billion from $25.1 billion in February. Pakistan’s debt to China is three times the IMF debt and more than the World Bank or Asian Development Bank.
The debt shows that China now plays a parallel role to the IMF by providing financing in balance of payments crises, rather than the concessional project financing modeled after the World Bank to various countries. Loans to Pakistan for balance of payment support from China continue to be disbursed.
Meanwhile, with the support of friendly nations, Pakistan secured a bailout from the IMF this week to avert an impending massive financial meltdown. China provided more than $4 billion in loans, while Arab countries, including Saudi Arabia, contributed $9 billion in investments and loans.
Pakistan’s external debt is generally low. What is there is mainly held by the public sector. Foreign loans account for 36% of the country’s total debt.