Islamabad:
China has assured Pakistan to move $ 3.7 billion in commercial loans, labeled in Chinese currency, before the end of June, including 2.4 billion dollars that mature next month in a decision that will help keep two -digit exchange reserves.
Unlike the past, when Beijing has also granted loans to non-Chinese money, this time the strategic ally of Pakistan has decided not to grant loans in the United States currency as part of its desire to decouple the economy of the dollar; Government sources have told The Express PK Press Club.
They declared that China had granted these insurances during the recent meetings, aimed at refining loans which matured between March and June 2025. Pakistan has already rendered a loan of $ 1.3 billion from the Industrial and Commercial Bank of China (ICBC) in three tranches between March and April of this year, officials said.
Subject to certain clarifications that the commercial bank has sought in Pakistan, it is expected that the ICBC relaunch money in Chinese currency in the coming days, government sources said. The ICBC had granted the loan two years ago to floating interest rates, which resulted in around 7.5%.
The central bank reserves remained about $ 11.4 billion after an injection of $ 1 billion by the IMF this month. After the following Chinese refinancing, it could increase to $ 12.7 billion before seeing another drop in the middle of next month, the sources said.
A union’s financing loan of $ 2.1 billion or 15 billion RMB by three Chinese commercial banks matured in June. Pakistan will pay at least three days before maturity to ensure that money is returned before the end of the exercise. China would give this money in RMB, said sources.
China Development Bank had given 9 billion RMB, the 3 billion RMB and ICBC Bank 3 billion RMB. The loan is extended for a period of three years, said government sources.
However, the question of interest rates is still not decided. Chinese authorities have given Pakistan two options. He proposed that Pakistan either get the loan at a fixed interest rate or a floating rate, but that would not be based on the Shanghai Interbak offered (Shibor), the sources said.
The appropriate refinancing of this loan was essential in Pakistan to keep the two -digit reserves by the end of June. As part of the International Monetary Fund (IMF) program, Pakistan is committed to increasing reserves by almost $ 14 billion during this exercise.
The loan of $ 300 million from the China Bank also has also threw up next month, that Pakistan must be refined to maintain reserves at their minimum critical levels. This loan would also be refined in Chinese currency, the sources said.
The decision to delinate loans from the US dollar is not specific to Pakistan, it is rather part of the global Chinese policy to decouple its economy from the American currency. Pakistan remains dependent on Beijing to stay afloat, the friendly nation that constantly exceeds cash deposits of $ 4 billion, $ 5.4 billion for commercial loans and $ 4.3 billion in commercial funding.
The recent IMF report indicated that the total foreign loans from Pakistan in December 2024 amounted to $ 6.2 billion, including $ 5.4 billion in Chinese commercial loans.
Rupes-dollas parity has remained widely stable during this exercise, although a certain depreciation in the past few days. Dollars parity closed to Rs282.2 to a dollar on Tuesday.
Once contacted, the spokesperson for the Ministry of Finance Qumar Abbasi did not give an official version for history. He had been invited to confirm whether China agreed to refinance an ICBC loan of $ 1.3 billion paid in March-April and if it will be refined in RMB. He also did not answer the question of whether China has also agreed to refinance an equivalent loan led by CDB at 2.1 billion dollars that Pakistan will pay in June.
The IMF report pointed out that Pakistan has received firm commitments to finance $ 1 billion over the next year. He added that the main bilateral partners remain determined to drive on the existing short -term responsibilities during the remaining program period.
But the IMF said that access to external commercial financing should remain limited during the program period, with a small issue of “panda” bonds provided for in the next fiscal year. The IMF sees a gradual return to the Eurobond and world market in Sukuk from the 2027 fiscal year, reflecting a restoration of political credibility.
