Islamabad:
China has assured Pakistan of giving $ 3.7 billion in commercial loans, called in Chinese currency, before the end of June, including $ 2.4 billion that mature next month, in a movement that will help maintain currency reserves in two digits.
Unlike the past, when Beijing has also granted loans to the non -Chinese currency, this time the strategic ally of Pakistan has decided not to grant loans in the United States currency as part of its impulse to decoupling the economy of the dollar; Government sources told The Express PAkGazette.
They said that China gave these guarantees during recent meetings, with the aim of ensuring the refinancing of loans that mature between March and June 2025. Pakistan has already returned a loan of $ 1.3 billion from the Industrial and Commercial Bank of China (ICBC) in three sections between March and April of this year, authorities said.
Subject to some clarifications that the commercial bank has sought in Pakistan, the ICBC is expected to drive money in the Chinese currency in the next few days, government sources said. The ICBC had granted the loan two years ago at floating interest rates, which resulted in around 7.5%.
The reserves of the Central Bank remained around $ 11.4 billion after an injection of $ 1 billion for the IMF this month. After the next Chinese refinancing, it can increase to $ 12.7 billion before seeing another fall in the middle of next month, the sources said.
A RMB union financing loan of $ 2.1 billion or 15 billion RMB for three Chinese commercial banks is maturing in June. Pakistan will pay at least three days before the expiration to ensure that the money is returned before the closing of the fiscal year. China would give this money in the RMB currency, the sources said.
The Chinese Development Bank had granted 9 billion RMB, Bank of China 3 billion RMB and ICBC 3 billion RMB. The loan extends for a period of three years, government sources said.
However, the interest rate problem was still undecided. Chinese authorities have given two options to Pakistan. He has proposed that Pakistan must obtain the loan at a fixed interest rate or a floating rate, but that would not be based on the interbank Shanghai rate offered (Shibor), the sources said.
The timely refinancing of this loan was critical for Pakistan to maintain reservations in the two digits at the end of June. According to the International Monetary Fund (IMF) program, Pakistan has pledged to increase reserves close to $ 14 billion in this fiscal year.
The loan of $ 300 million from the Bank of China will also mature next month, which Pakistan must be refinanced to retain reservations at their minimum critical levels. This loan would also be refinanced in Chinese currency, the sources said.
Moving on offense loans from the US dollar is not specific to Pakistan, but is part of Chinese general politics to decoupling its American currency economy. Pakistan continues to depend on Beijing to remain afloat, the friendly nation that constantly passes on cash deposits of $ 4 billion, $ 5.4 billion worth commercial loans and a commercial financing installation of $ 4.3 billion.
The recent IMF report stated that total foreign commercial loans from Pakistan as of December 2024 amounted to $ 6.2 billion, including Chinese commercial loans of $ 5.4 billion.
The parity of Rupee-Dollar has remained largely stable in this fiscal year, although some depreciation in recent days. Rupee-Dollar parity closed at RS282.2 to a dollar on Tuesday.
When contacted, the spokesman for the Ministry of Finance Qumar Abbasi did not give an official version for the story. He had been asked to confirm if China agreed to refinance the ICBC loan of $ 1.3 billion paid in March-April and if it will be refinant in the RMB currency. Nor did he answer a question if China also agreed to refinance an equivalent CDB loan of $ 2.1 billion that Pakistan will pay in June.
The IMF report stressed that Pakistan has received firm commitments for financing of $ 1 billion in next year. He added that key bilateral partners are still committed to transferring existing short -term liabilities in the remaining program period.
But the IMF said that access to external commercial financing is expected to remain limited during the program period, with a small “panda” bond issuance in advance in the next fiscal year. The IMF sees a gradual return to the Eurobond market and global Sukuk of fiscal year 2027, which reflects a restoration of the credibility of politics.
