Officials noted that Pakistan has already repaid $1.3 billion to the Industrial and Commercial Bank of China in three instalments earlier this year
News Desk
BEIJING: China has assured Pakistan it will extend a trade loan worth $3.7 billion by the end of June, including $2.4 billion due for repayment next month. This move aims to help Pakistan maintain its foreign exchange reserves in double digits amid ongoing economic challenges. Government sources told the mediathat while China has previously extended loans in currencies other than its own, this time it has decided not to lend in US dollars.
The decision aligns with Beijing’s broader policy to reduce Pakistan’s reliance on the dollar and promote the use of the Chinese currency in bilateral trade. The assurances followed talks held between March and June 2025 to secure refinancing of Pakistan’s maturing debts. Officials noted that Pakistan had already repaid $1.3 billion to the Industrial and Commercial Bank of China (ICBC) in three instalments earlier this year.
Sources added that ICBC has requested some clarifications from Pakistan and is expected to reissue the loan in Chinese Renminbi (RMB) within days. The original loan was granted two years ago at a floating interest rate of around 7.5 per cent. After receiving $1 billion from the International Monetary Fund (IMF) this month, Pakistan’s central bank reserves rose to about $11.4 billion. With the next round of refinancing, reserves could climb to $12.7 billion by mid-June before facing another dip.
Additionally, three Chinese commercial banks are set to mature a syndicated financing loan worth $2.1 billion (15 billion RMB) in June. Pakistan plans to repay this loan at least three days before maturity, ensuring it is cleared before the end of the financial year. The loans come from China Development Bank (9 billion RMB), Bank of China (3 billion RMB), and ICBC (3 billion RMB).
The government is negotiating a three-year extension on repayment terms, though the interest rate remains undecided. China has offered Pakistan two options: either a fixed-rate or floating-rate loan, but not linked to the Shanghai Interbank Offered Rate (Shibor). This timely refinancing is crucial to keeping Pakistan’s reserves above double digits through June. Under the IMF program, Pakistan has committed to raising its reserves to nearly $14 billion by the end of the financial year.
