Islamabad, 28 May 2025: China to Refinance approximately $3.7 billion to support Pakistan’s foreign exchange stability in June, according to senior officials familiar with the matter.
The financial support aims to keep Islamabad’s reserves above the crucial $10 billion threshold as the country prepares for a demanding fiscal year.
Strategic Yuan Lending Marks Shift in China’s Global Loan Policy
China to Refinance this support largely in Chinese yuan rather than US dollars a move signaling Beijing’s continued pivot away from dollar-based transactions in its overseas lending.
The package includes a blend of fresh disbursements and loan renewals, underscoring China’s commitment to bolstering a key regional ally’s economy.
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Officials revealed that the Industrial and Commercial Bank of China (ICBC) is set to roll over a previously settled loan of $1.3 billion.
This facility, issued earlier at a floating rate of roughly 7.5 percent, was repaid by Islamabad between March and April 2024. The renewed version is also expected to be denominated in renminbi (RMB).
$2.1 Billion Syndicated Loan to Be Repaid and Renewed
In addition to the ICBC rollover, another significant chunk of Pakistan’s upcoming obligations includes a RMB 15 billion ($2.1 billion) syndicated loan, originally arranged by three major Chinese institutions: China Development Bank (RMB 9 billion), the Bank of China (RMB 3 billion), and ICBC (RMB 3 billion).
This loan matures in June, and sources confirmed that Pakistan intends to settle the repayment days ahead of the due date and expects it to be refinanced in yuan as well.
During recent diplomatic engagements, Chinese officials reassured Islamabad that all loans maturing between March and June 2025 would be refinanced.
The deliberate shift away from US dollars, according to insiders, is part of China’s broader monetary strategy, not driven by Islamabad’s preferences.
Pakistan’s Foreign Reserves Rise, But Financing Needs Grow
China to Refinance this package just weeks after Pakistan’s foreign reserves surged to $11.4 billion in May, bolstered by a $1 billion International Monetary Fund (IMF) tranche.
However, Pakistan’s Ministry of Finance estimates that over $25 billion in external financing will be required during the next financial year to meet obligations and maintain economic stability.
Breakdown of expected financing includes:
- $12 billion in loan rollovers from allied nations like China, Saudi Arabia, and the UAE
- $4.6 billion in project-based financing
- $3.2 billion in refinanced Chinese commercial debt
- $1 billion in new loans from Chinese institutions
- $2 billion in deferred oil import payments
- $2 billion from the IMF
Project financing is anticipated to come from international lenders such as the Asian Development Bank and other multilateral banks.
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Management of this complex financing framework will be shared across Pakistan’s Economic Affairs Division, central bank, and Finance Ministry, with each handling specific components ranging from multilateral loans to IMF-linked disbursements.
This multifaceted financial plan highlights Pakistan’s reliance on longstanding allies like China to navigate its fiscal pressures especially as Beijing continues to expand its economic influence through currency driven diplomacy.
