China is set to re-lend around $3.7 billion to Pakistan next month, helping Islamabad maintain its foreign exchange reserves above $10 billion,
The package includes both refinancing and fresh disbursements, with most of the funds being extended in Chinese yuan, reflecting Beijing’s shift away from dollar-based lending.
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Sources indicated that the Industrial and Commercial Bank of China (ICBC) will roll over a $1.3 billion loan, previously repaid by Pakistan between March and April 2024. The original loan had a floating interest rate of approximately 7.5 percent.
Additionally, a $2.1 billion (RMB 15 billion) syndicated loan—comprising RMB 9 billion from China Development Bank, RMB 3 billion from Bank of China, and RMB 3 billion from ICBC—is maturing in June. Pakistan intends to repay the amount shortly before its due date and anticipates full refinancing in RMB.
Chinese officials have reassured Pakistan of their commitment to refinancing all loans due from March through June 2025. The move to exclude the U.S. dollar from these transactions is a strategic decision by Beijing.
Meanwhile, Pakistan’s foreign exchange reserves climbed to $11.4 billion in May after receiving a $1 billion tranche from the IMF. The Finance Ministry projects the country will need over $25 billion in external financing for the upcoming fiscal year.
