China has extended the repayment period of a $2 billion loan to Pakistan by one year, offering crucial financial relief to the country, the finance ministry confirmed on Saturday.

The loan was originally due for repayment on March 24, but China has agreed to defer it to support Pakistan’s economic stability and recovery efforts, the ministry said in a statement.

“This extension will help Pakistan maintain its foreign exchange reserves and strengthen financial stability,” the statement added.

China has been a key economic partner for Pakistan, providing financial assistance and investments, particularly under the China-Pakistan Economic Corridor (CPEC) initiative, Express News reported.

The extension comes as Pakistan continues to navigate economic challenges, including a balance of payments crisis and ongoing talks with international lenders to secure further financial assistance.

Officials say the loan deferment will ease immediate repayment pressures as the government focuses on stabilising the economy.

Moreover, earlier this week, Pakistan and the International Monetary Fund (IMF) officially initiated discussions for the first review of the $7 billion Extended Fund Facility (EFF) secured last year.

According to the Ministry of Finance, the IMF delegation, led by Nathan Porter, met with Finance Minister Muhammad Aurangzeb in Islamabad. The meeting focused on the overall economic situation in the country.

During the meeting, Pakistan has assured the global lender of its commitment to fiscal discipline and economic reforms as talks continue in Islamabad for the latest economic review.

Finance Minister Muhammad Aurangzeb briefed the IMF delegation on the country’s macroeconomic situation, revenue collection, and progress on structural reforms.

He reiterated that Pakistan remains committed to meeting the conditions of its $7 billion loan programme.