ISLAMABAD: In a move aimed at supporting Pakistan’s economic stability, China is expected to re-lend approximately $3.7 billion in June.
The assistance, comprising both refinancing and new disbursements, will be largely provided in Chinese yuan (RMB), as Beijing continues shifting away from dollar-denominated lending.
Senior officials confirmed that the Industrial and Commercial Bank of China (ICBC) will roll over a previously repaid $1.3 billion loan in RMB. This loan, originally issued with a floating interest rate of around 7.5%, was paid off by Pakistan between March and April 2024.
Additionally, a $2.1 billion syndicated loan, equivalent to RMB 15 billion, from three Chinese banks is due to mature in June. The lenders include:
Pakistan intends to repay this loan shortly before its maturity and anticipates receiving refinancing in RMB.
During high-level meetings, Chinese authorities assured Pakistan that they would refinance all loans maturing between March and June 2025. The decision to opt out of US dollar-based lending comes directly from Beijing.
Following a $1 billion disbursement from the IMF, Pakistan’s foreign exchange reserves rose to $11.4 billion in May. However, the Finance Ministry projects that the country will need over $25 billion in external financing for the upcoming fiscal year.
The anticipated external financing will include:
Project financing is expected from organizations such as the Asian Development Bank (ADB) and other global financial institutions. The Economic Affairs Division will oversee around $20 billion of this financing, while the Finance Ministry and State Bank will manage rollovers and IMF disbursements.