Pakistan has formally requested China to accelerate the refinancing of $1.3 billion in commercial loans as the government seeks to strengthen its foreign exchange reserves following major external debt repayments made in July.
According to a report citing Ministry of Finance sources, Islamabad has asked Chinese authorities to expedite the refinancing process, with negotiations currently underway to finalize the terms and conditions. If completed on schedule, the funds are expected to be disbursed before the end of August.
The request comes after Pakistan made $2.2 billion in external debt payments during July, including the repayment of $1.3 billion in Chinese commercial loans.
Officials believe the refinancing will provide a significant boost to the country’s foreign exchange reserves and support external financing requirements.
Sources said Pakistan has repaid around $1.4 billion to China in total, with the amount expected to be refinanced within the coming weeks. However, Chinese banks have yet to complete the refinancing process, prompting the government to formally seek an expedited release of the funds.
Last week, State Bank of Pakistan (SBP) Governor Jameel Ahmad confirmed that Pakistan repaid $2.2 billion in external debt during July. He also stated that the country’s total external debt servicing requirement has declined from $26.5 billion to $21.5 billion, while approximately $3.5 billion will be paid as interest during the current fiscal year.
The SBP governor said the government’s strategy remains focused on easing debt repayment pressures and strengthening foreign exchange reserves. He added that Pakistan is also expecting the rollover of around $12 billion in deposits and loans from China and Saudi Arabia during the current fiscal year to help meet its external financing obligations.
The refinancing of the Chinese commercial loans is seen as an important component of Pakistan’s efforts to maintain external sector stability and improve investor confidence.
