China has agreed to roll over $3.7 billion in loans to Pakistan by June 2025, providing crucial financial support ahead of the country’s debt maturities.
The total includes $2.4 billion due next month and another $1.3 billion previously repaid by Pakistan to the Industrial and Commercial Bank of China (ICBC) during March and April.
These yuan-denominated loans are expected to strengthen the State Bank of Pakistan’s foreign exchange reserves while also injecting liquidity into the domestic rupee market.
This arrangement stands in contrast to the International Monetary Fund’s Extended Fund Facility loans, which are held solely for balance-of-payments support and cannot be used for broader liquidity needs.
Together with expected inflows from multilateral lenders and commercial sources, the decision of China to roll over $3.7 billion to Pakistan could help boost Pakistan’s reserves to around $13–14 billion by the end of the fiscal year.
Although Pakistan posted a $1.9 billion current account surplus during the first 10 months of FY25, foreign exchange reserves have not seen major growth due to continued net outflows on the financial account.
Related Posts
