China assured Pakistan of giving $ 3.7 billion in trade loans by the end of June. It also includes the $ 2.4 billion that is coming next month.
China’s move will help keep Pakistan’s foreign exchange reserves in a double digit. Government sources told the “The Express Tribune” that Beijing had also lendd in non -Chinese currency in the past, but this time Pakistan’s strategic ally, China, has decided not to lend to US currency under a campaign to reduce the dollar dependence on the economy.
Sources said that China has given these assurances during the recent meetings that were to secure the loan -financing of debts paid between March and June 2025. Pakistani authorities have said that Pakistan has already repaid a $ 1.3 billion loan from the Industrial and Commercial Bank of China (ICBC) in three installments between March and April this year.
Read more: Pakistan’s request to resolve $ 3.4 billion loan from China
Official sources said that the Commercial Bank has sought some explanations from Pakistan and the ICBC is expected to lend the money back to the Chinese currency in the next few days.
The ICBC loaned the floating rate two years ago. Which meant that the loan was given about 7.5 % interest rate. Central bank reserves have risen to about $ 11.4 billion this month after receiving $ 1 billion from the IMF.
The reserves can rise to $ 12.7 billion before seeing another decline from the middle of next month after the next Chinese refinance. Sources said that $ 2.1 billion (15 billion RMB) syndicate financing loan is being matched in June by three Chinese commercial banks. Pakistan will pay this loan at least three days before maturity to ensure that.
The loan will be paid before the end of the financial year. Sources said that China will pay the money in RMB currency. China Development Bank has given 9 billion RMB, Bank of China 3 billion RMB and ICBC 3 billion RMB.
Read more: Pakistan received $ 6 billion in aid this year
Government sources said the loan period is being extended for three years, but the interest rate issue is still unprofessional. Chinese authorities have given two options to Pakistan. China has suggested to Pakistan that it should either get a loan at a fixed interest or at a floating rate, but it will not be based on the Shanghai Interbank Offer Rate.
The timely refining of this loan was important for Pakistan to keep the reserves in a double diget by the end of June. Under the IMF program, Pakistan has pledged to increase the reserves to close to $ 14 billion this fiscal. The Bank of China’s $ 300 million debt will also be paid next month.
Pakistan will also have to refrain it so that the reserves can be maintained at the least level. Sources said that the loan will also be refused in Chinese currency. Remember that the move to debt loans from the US dollar is not specific to Pakistan.
Read more: IMF and government goals could not be agreed, the budget will be presented on June 10
It is part of the overall Chinese policy to separate its economy from the US currency. Pakistan is relying on Beijing to survey. Pakistan’s friend China is rolling $ 4 billion worth of cash deposits, $ 5.4 billion worth of trade loans and $ 4.3 billion in trade financial facilities.
According to a recent IMF report, Pakistan’s total foreign trade loans were $ 6.2 billion by December 2024, including $ 5.4 billion Chinese trade loans. Equality between rupees and dollars this fiscal has been largely stable. Ministry of Finance spokesman Qamar Abbasi on Tuesday did not answer the question regarding China’s debt -based loans.
