China has agreed to reschedule $1.8 billion worth of concessional loans and preferential buyer credit to support Pakistan in meeting the foreign financing benchmarks under the ongoing IMF programme.
This development follows Pakistan’s original request to reschedule $3.4 billion in loans from the Export-Import Bank of China. However, the final agreement excludes the buyer’s credit portion, limiting the rescheduled amount to $1.8 billion.
The rescheduling will span two years, from July 2025 to June 2027, providing critical relief to help Pakistan avoid default risks and maintain financial stability.
While Pakistan will continue to pay interest on the rescheduled loans, the move is considered crucial for reinforcing the country’s dwindling foreign exchange reserves, which recently dipped below $10 billion after the repayment of a $2.1 billion Chinese loan.
With the expected refinancing of Chinese loans, reserves are projected to rise to $14 billion by the end of June 2025, aligning with Finance Minister Muhammad Aurangzeb’s forecast for the fiscal year.
Additionally, the anticipated disbursement of a $1 billion loan from the Asian Development Bank and other refinancing measures will further aid Pakistan’s reserve position.
The deal excludes buyer’s credit loans—an unresolved issue during the negotiations—and focuses solely on government-to-government concessional lending and preferential credit used for infrastructure and development projects.
This rescheduling forms a key part of Pakistan’s broader strategy to meet IMF conditions, as the Fund identified a $5 billion external financing gap for the three-year programme.
China’s support has remained critical to Pakistan’s financial stability, particularly as Islamabad works to meet IMF targets and navigates $20 billion in external debt obligations in the upcoming fiscal year. Pakistan is also expecting nearly $13 billion in bilateral deposit rollovers from partner countries to fulfill its IMF commitments.
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