Pakistan has formally requested China to refinance a $1.3 billion commercial loan after repaying the same amount last month, in a move aimed at strengthening the country’s foreign exchange reserves and easing external financing pressures.
According to sources in the Ministry of Finance, discussions with Chinese authorities are underway to finalize the terms and conditions of the refinancing agreement. Officials expect the funds to be received later this month once the deal is completed.
The refinancing request comes after Pakistan made $2.2 billion in external debt repayments during July, including the repayment of the $1.3 billion Chinese commercial loan. The fresh inflow is expected to replenish reserves and support the country’s external account.
The move is part of the government’s broader strategy to maintain adequate foreign exchange reserves while meeting ongoing debt servicing obligations.
Meanwhile, the State Bank of Pakistan (SBP) is expected to purchase more than $7 billion from the interbank foreign exchange market during the current fiscal year. Officials say these dollar purchases will help meet future external debt repayments while also strengthening Pakistan’s reserve position.
Pakistan has relied on refinancing from friendly countries, particularly China, Saudi Arabia, and the UAE, to manage its external financing needs in recent years. The latest request reflects Islamabad’s continued efforts to maintain macroeconomic stability as it navigates heavy debt repayment obligations.
The refinancing also comes as Pakistan seeks to sustain investor confidence following recent improvements in key economic indicators, including higher foreign exchange reserves, easing inflation, and progress under its economic reform agenda.