Pakistan has repaid a Chinese commercial loan of $ 1 billion on the understanding of getting it refinanced soon, which temporarily drew the nation’s thin currency reserves to a six -month low of $ 10.6 billion.

The government returned the $ 1 billion loan in the industrial and commercial bank in China (ICBC) in two equal tranches this month, the Pakistani authorities said. The ICBC had given the loan two years ago to liquid interest rates that translated about 7.5%.

The sources said another loan tranche of $ 300 million of ICBC will mature in the middle of next month. The government will also withdraw $ 300 million in April, they added.

Due to repayment of the second tranche of $ 500 million in the third week of March, the Central Bank’s reserves dropped to $ 10.6 billion. This drew the gross official currency reserves to the lowest level of six-months.

The first traction of $ 500 million had been paid in the first week of March, and the central bank covered the gorge by buying dollars from the market and on the back of some foreign influxes.

The Central Bank Governor said earlier that his institution bought $ 9 billion from the market to build the currency reserves in 2024. Without these purchases, the reserves would hardly have been $ 2 billion despite the international monetary fund program.

The Ministry of Finance was hopeful that the ICBC would refinance the plant. They said that discussions have already begun, but have not yet reached the point where the interest rate is determined.

Pakistan is highly dependent on Beijing to remain fluid, the friendly nation that is constantly rolling over the $ 4 billion cash deposits, $ 6.5 billion for commercial loans and $ 4.3 billion trade financing facility.

The $ 2.7 billion more Chinese commercial loans mature from April to June this year. A $ 2.1 billion dollars from three Chinese business banks mature in June. Separately, Bank of China’s $ 300 million will also mature in the same month, which Pakistan has to be refinanced to maintain reserves at their critical minimum levels.

The country still depends strongly on the fresh foreign loans and rollover and refinancing of the existing debt to avoid a race in its reserves. Unlike before, the IMF program this time has not helped to get greater foreign funding.

Pakistan and the IMF have reached an agreement on staff level on the end of the first review of the extended fund facility this week. The Board’s approval of the agreement will lead to the release of $ 1 billion tranche.

However, the timing of the IMF board meeting remains uncertain due to exogenous and original reasons. The board may take Pakistan’s case either in May or June. There is a desire to complete the first review and pay out Tranche by the end of June.

In the event that the IMF board meeting slides to June, the IMF staff may first like to review and join the financial year 2025-26 budget.

There are many areas that remain open to discussions, especially taxation of the real estate sector, beverages and tobacco. The IMF is not inclined to reduce the transaction fees on the properties as part of its PO? Licy to change investment from speculative to productive sectors in the economy.

Last month, Pakistan had also requested China to re -plan $ 3.4 billion debt for two years to bridge a foreign funding gap identified by the IMF. The request had been made for Export-Import (Exim) Bank of China to consider the rearrangement of its loan to be paid from October 2024 to September 2027.

The Ministry of Finance has not yet officially published the status of the request. Pakistan is obliged to identify financing sources to fill the $ 5 billion external funding gap for the three-year IMF program period.

During the recent review interviews, the IMF agreed that the external sector has been stabilized, but at the same time it said that the vulnerabilities that remain that can be treated through the combination of tight fiscal and monetary policies and exchange rate flexibility.

Rupee-dollar parity has been largely stable in this financial year, albeit some depreciation over the past few days. Rupee-dollar parity closed at RS280.2 to a dollar Thursday.