China will re-lend approximately $3.7 billion to Pakistan next month and help maintain its foreign exchange reserves above $10 billion, senior sources informed ProPakistani.
The loan, which includes both refinancing and new disbursements, will largely be provided in Chinese yuan as Beijing moves away from dollar-denominated lending.
Sources confirmed that the Industrial and Commercial Bank of China (ICBC) is expected to roll over a previously repaid $1.3 billion loan in Chinese Yuan (RMB). This loan, originally issued at a floating interest rate of about 7.5 percent, was repaid by Pakistan between March and April 2024.
Sources revealed that a $2.1 billion (RMB 15 billion) syndicated loan from three Chinese banks i.e. China Development Bank (RMB 9 billion), Bank of China (RMB 3 billion), and ICBC (RMB 3 billion) will mature in June. Pakistan plans to repay the amount a few days before maturity and expects the refinancing to also be provided in RMB.
During recent meetings, Chinese authorities assured Pakistan of refinancing all loans due between March and June 2025. The decision not to use US dollars is China’s call.
Pakistan’s foreign exchange reserves rose to $11.4 billion in May following a $1 billion disbursement from the IMF. The Finance Ministry estimates that Pakistan will require over $25 billion in external financing during the next fiscal year.
This includes $12 billion in rollovers from friendly countries, including China, Saudi Arabia, and the UAE, $4.6 billion in project financing, $3.2 billion in refinancing of Chinese commercial loans, $1 billion in new commercial loans from China, $2 billion in deferred oil payments, and $2 billion in IMF disbursements
Project financing is expected from institutions such as the ADB and other global banks. Sources added that the Economic Affairs Division will oversee roughly $20 billion of this financing, while the central bank and the Finance Ministry will handle rollovers and IMF-related disbursements.