PESHAWAR: China has rolled over $3.4 billion in loans to support Pakistan’s foreign exchange reserves, a crucial step in helping the country meet its commitments under a $7 billion bailout agreement with the International Monetary Fund (IMF).
According to two senior Pakistani government officials, who spoke on condition of anonymity, the move includes a $2.1 billion deposit that has remained with the State Bank of Pakistan for the past three years, as well as the refinancing of a $1.3 billion commercial loan that Islamabad had repaid just two months ago.
This financial assistance comes at a vital time. Pakistan is required to maintain foreign reserves above $14 billion by June 30, the end of its fiscal year, as a key condition set by the IMF. The rollover from China helps bridge that gap. One of the officials confirmed that the new inflows ensure that the country now meets that reserve target, easing pressure on its external accounts.
In addition to the Chinese rollover, Pakistan has also secured $1 billion in financing from commercial banks in the Middle East and another $500 million from multilateral sources. These inflows, combined with domestic reforms, have contributed to a sense of cautious optimism among government officials, who believe the economy is showing signs of stabilization.
The IMF program, which Pakistan entered to avert a balance of payments crisis, has demanded tough fiscal and monetary measures, including reducing subsidies, increasing tax revenue, and building up reserves. The recent support from China, a longstanding ally, once again highlights Beijing’s role as a key financial partner during Pakistan’s times of need.
Although the situation remains challenging, with external debt obligations and economic vulnerabilities still weighing heavily, Pakistani authorities say they are committed to seeing through the reforms. A formal announcement regarding the loan rollovers and reserve position is expected once all official procedures are complete.
The Pakistani government remains optimistic that with continued inflows and the implementation of key economic reforms, it will emerge from the current crisis on more stable footing. However, the path ahead remains challenging, with rising debt servicing obligations and persistent structural economic weaknesses.Officials are expected to formally announce the loan rollover and reserve updates once all legal and procedural formalities are completed.
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