ISLAMABAD – After repaying $2.2 billion in external obligations last month, Pakistan is now seeking early refinancing of $1.3 billion from China to replenish foreign exchange reserves and ease pressure on the country’s external financing needs.
Pakistan’s foreign exchange reserves are set for a potential boost as Islamabad has formally approached China for the early refinancing of $1.3 billion, a move aimed at strengthening the country’s external financing position after a series of major debt repayments.
Islamabad requested Beijing to expedite the refinancing process for the $1.3 billion commercial loan that was repaid last month. The Ministry of Finance confirmed that officials from both countries are currently engaged in negotiations to finalize the terms and conditions of the refinancing arrangement.
Authorities expect the process to be completed within August, allowing the funds to flow back into Pakistan’s accounts and provide timely support to the country’s foreign exchange reserves.
The refinancing request comes after Pakistan cleared $2.2 billion in external obligations during July, including the repayment of the $1.3 billion Chinese commercial loan. The expected refinancing would effectively restore a significant portion of the reserves used for those repayments.
Finance Ministry officials also said the State Bank of Pakistan (SBP) is expected to purchase more than $7 billion from the interbank market during the current fiscal year. The acquired dollars will be used to meet external debt servicing requirements while also helping maintain a stable level of foreign exchange reserves.
The anticipated Chinese refinancing is being viewed as an important step in Pakistan’s broader strategy to manage external financing needs, sustain reserve levels, and ensure smooth repayment of foreign liabilities amid ongoing economic stabilization efforts.
