China is expected to roll over $3.7 billion in loans to Pakistan by the end of June 2025, offering a critical cushion as Islamabad prepares to meet upcoming debt payments, according to people familiar with the development.
The rollover includes $2.4 billion in loans due to mature next month, as well as another $1.3 billion that Pakistan had returned to the Industrial and Commercial Bank of China (ICBC) in March and April, the people said, requesting anonymity as the information is not yet public.
All the loans are denominated in Chinese yuan and are likely to provide much-needed breathing space for Pakistan’s external account. Officials anticipate the move will not only help stabilise the State Bank of Pakistan’s (SBP) foreign currency reserves but also improve rupee liquidity in the domestic banking system.
Unlike IMF funding, which is typically parked at the SBP for balance-of-payments support, Chinese funds have a broader utility and can circulate within the financial system, aiding both reserves and liquidity.
The expected rollover, combined with inflows from multilateral lenders and commercial financing, could lift SBP’s reserves to around $13 billion to $14 billion by the end of the fiscal year, according to estimates by officials involved in economic planning.
Pakistan’s current account posted a surplus of $1.9 billion during the first ten months of the ongoing fiscal year. However, the financial account has remained under pressure, limiting the buildup of reserves despite the surplus on the current side.
Islamabad continues to rely on external backing, including support from allies like China, as it navigates a narrow path between managing repayments and pursuing a fresh IMF loan programme to stabilise the economy.
