Islamabad:
China has assured Pakistan to reach $ 3.7 billion in commercial loans, denominated in Chinese currency, by the end of June, including $ 2.4 billion matures next month, in a step that will help keep the currency reserves in double difference.
Unlike in the past, as Beijing has also granted loans in non-Chinese currency, Pakistan’s strategic allies have this time decided not to grant loans in the US currency as part of its drive to decouple the economy of the dollar; The government sources told The Express Pakinomist.
They said China gave these insurance policies during recent meetings aimed at ensuring the refinancing of loans maturing between March and June 2025. Pakistan has already returned a $ 1.3 billion loan in the industrial and commercial bank of China (ICBC) in three traits between March and April this year, officials said.
Subject to some clarifications that the commercial bank has applied for from Pakistan, ICBC is expected to reproduce the money in the Chinese currency for the next few days, the government sources said. The ICBC had given the loan two years ago to liquid interest rates that translated at around 7.5%.
The Central Bank’s reserves remained about $ 11.4 billion after a $ 1 billion injection of the IMF this month. After the next Chinese refinancing, it could rise to $ 12.7 billion before seeing another dip from the middle of next month, the sources said.
A $ 2.1 billion or 15 billion RMB Syndicate Financing Loans of Three Chinese Business Banks Mature in June. Pakistan pays at least three days prior to the maturity to make sure the money is returned before the end of the financial year. China would give this money in RMB currency, the sources said.
China Development Bank had given 9 billion RMB, Bank of China 3 billion RMB and ICBC 3 billion RMB. The loan is extended for a period of three years, the government sources said.
However, the interest problem was still indefinite. Chinese authorities have provided two options to Pakistan. It has suggested that Pakistan should either get the loan at a fixed interest rate or at a fluid interest rate, but it would not be based on Shanghai Interbank offered the interest rate (Shibor), the sources said.
The timely refinancing of this loan was critical of Pakistan for keeping the reserves in the double digits at the end of June. Under the International Monetary Fund (IMF) program, Pakistan has committed to increasing reserves close to $ 14 billion in this financial year.
Bank of China’s $ 300 million loan is also maturing next month, which Pakistan has to be refinanced to maintain reserves at their critical minimum levels. Also, this loan would be refinanced in Chinese currency, the sources said.
The move to demolish loans from the US dollar is not Pakistan -specific, it is part of the overall Chinese policy to decouple its economy from the US currency. Pakistan remains dependent on Beijing to remain fluid, the friendly nation constantly rolling over the $ 4 billion cash deposits, $ 5.4 billion for commercial loans and $ 4.3 billion trade funding facility.
The recent IMF report stated that Pakistan’s total foreign commercial loans from December 2024 amounted to $ 6.2 billion, including $ 5.4 billion Chinese commercial loans.
Rupee-dollar parity has been largely stable in this financial year, albeit some depreciation over the past few days. Rupee-dollar parity closed at RS282.2 to a dollar on Tuesday.
When contacted, the Ministry of Financial spokesman Qumar Abbasi did not give an official version to the story. He had been requested to confirm whether China has agreed to refinance $ 1.3 billion ICBC loans paid in March-April and whether it will be refinanced in RMB currency. He also did not answer a question whether China also accepted to refinance $ 2.1 billion similarly CDB-led loans that Pakistan will pay in June.
The IMF report emphasized that Pakistan has received fixed obligations for $ 1 billion financing in the next year. It added that the most important bilateral partners remain obliged to roll over existing short -term obligations during the remaining program period.
But the IMF said access to external commercial financing is expected to remain limited during the program period, with a small “panda” bond issue expected in the next financial year. The IMF sees a gradual return on Eurobond and the global Sukuk market from the 2027 financial year, reflecting a restoration of the credibility of Politics.
