China is set to re-lend around $3.7 billion to Pakistan next month, helping the country keep its foreign exchange reserves above the $10 billion mark, according to senior officials.
The financial support will include both refinancing of existing loans and fresh disbursements, with most of the funds being provided in Chinese yuan rather than US dollars. This move reflects Beijing’s ongoing shift away from dollar-based lending.
Officials confirmed that the Industrial and Commercial Bank of China (ICBC) will roll over a $1.3 billion loan that Pakistan had already repaid between March and April 2024.
This loan was initially issued with a floating interest rate of about 7.5 percent and will now be extended again, but in Chinese yuan (RMB).
In addition, a syndicated loan worth $2.1 billion (roughly RMB 15 billion) from three Chinese banks, China Development Bank (RMB 9 billion), Bank of China (RMB 3 billion), and ICBC (RMB 3 billion), is due to mature in June.
Pakistan plans to repay this amount shortly before it is due and expects the refinancing to also be done in RMB.
During recent discussions, Chinese officials gave Pakistan their assurance that they would refinance all loans maturing between March and June 2025. The decision to conduct these transactions in yuan rather than US dollars is entirely China’s own.
Pakistan’s foreign exchange reserves climbed to $11.4 billion in May, helped by a $1 billion loan installment from the International Monetary Fund (IMF).
The Ministry of Finance projects that the country will need more than $25 billion in external financing for the upcoming fiscal year.
This includes $12 billion in rollovers from allied nations such as China, Saudi Arabia, and the UAE.
Additional requirements include $4.6 billion for project-based financing, $3.2 billion to refinance Chinese commercial loans, $1 billion in new commercial loans from China, $2 billion in deferred oil payments, and another $2 billion expected from the IMF.
Major funding for development projects is likely to come from the Asian Development Bank and other international financial institutions.
The Economic Affairs Division is expected to handle about $20 billion of this financing, while the central bank and the Finance Ministry will oversee loan rollovers and IMF-related funding.