The Government of Pakistan is working on securing two foreign loans totaling $3.3 billion from Chinese financial institutions, aimed at strengthening the country’s foreign exchange reserves and supporting domestic debt repayments.
The financing includes:
- A $2 billion syndicated loan from a consortium of Chinese banks, with a three-year term.
- A $1.3 billion refinancing facility from the Industrial and Commercial Bank of China (ICBC), representing a rollover of a commercial loan previously repaid by Pakistan.
If disbursed before the end of the current fiscal year (June 30, 2025), these inflows are expected to push State Bank of Pakistan’s foreign exchange reserves beyond $14 billion, with the potential to reach $15 billion. As of June 13, 2025, reserves stood at $11.7 billion.
In local currency terms, the expected funding would generate approximately PKR 924 billion, enabling the government to meet short-term domestic debt maturities due in early July 2025.
While the currency of disbursement (USD or RMB) has not yet been confirmed, these inflows are seen as critical to maintaining macroeconomic stability amid global uncertainties.
Meanwhile, rising geopolitical tensions in the Middle East, particularly the risk of a blockade in the Strait of Hormuz, have triggered concerns over oil supply disruptions. Oil prices have recently climbed to $75–76 per barrel, and could potentially rise above $85–90 if regional instability continues. Such a surge could pressure Pakistan’s current account, which had been in surplus throughout FY 2024–25.
Additionally, Saudi Arabia provided $100 million in May 2025 under its oil facility arrangement, although the specific allocation of the funds remains unclarified in official data.
