Islamabad: In a critical financial development, China has extended rollover and refinancing support for USD 3.4 billion in commercial loans to Pakistan, enabling the country to meet the International Monetary Fund’s (IMF) condition of maintaining over USD 14 billion in foreign exchange reserves by the end of the fiscal year on June 30.
According to official sources, the support includes the rollover of USD 2.1 billion currently parked with the State Bank of Pakistan (SBP) and the refinancing of another USD 1.3 billion loan that Islamabad had repaid two months earlier. The move comes as Pakistan scrambles to shore up its external buffers to comply with the IMF’s Extended Fund Facility (EFF) requirements.
The IMF had required Pakistan to maintain foreign exchange reserves above the USD 14 billion mark by June 30 to stay on track with the ongoing USD 7 billion bailout program. The loans from China have played a vital role in achieving this benchmark.
In addition to the Chinese support, Pakistan also received USD 1 billion from Middle Eastern commercial banks and USD 500 million from multilateral partners, further strengthening the reserve position. “This brings our reserves in line with the IMF target,” confirmed an official familiar with the matter.
Earlier this year, on March 9, China had already extended the repayment period of a USD 2 billion loan by one year. China continues to be Pakistan’s largest bilateral creditor and a key source of external financing. Nearly 92% of Pakistan’s external debt is owed to multilateral and bilateral lenders, with China holding the lion’s share among bilateral partners.
Despite these inflows, the State Bank of Pakistan’s foreign exchange reserves stood at USD 9.06 billion as of June 20, after a USD 2.66 billion decline in that week. However, the recent disbursements are expected to bring the total reserves above the critical threshold set by the IMF.
Pakistani authorities have stated that the economy is showing signs of stability due to ongoing reforms under the IMF program, which remains crucial for unlocking future financing and restoring investor confidence.
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