China Rolls Over Loans to Pakistan, Helping Islamabad Hit IMF Reserve Target
China has extended $3.4 billion in commercial loans to Pakistan, helping the country reach the $14 billion reserve target required by the International Monetary Fund (IMF). The latest financial support includes a $2.1 billion loan rollover and a $1.3 billion loan refinancing, which Pakistan had repaid two months earlier.
A senior finance ministry official confirmed that this assistance, along with $1 billion from Middle Eastern banks and $500 million in multilateral aid, enabled Pakistan to meet the IMF’s reserve requirement by the June 30 deadline.
China Remains Pakistan’s Top Bilateral Creditor
With this latest move, China reaffirmed its role as Pakistan’s largest bilateral lender. The $2.1 billion loan, part of Pakistan’s central bank reserves for three years, was extended. In addition, China refinanced the $1.3 billion commercial loan previously paid off, easing Islamabad’s financial burden.
Earlier this year, on March 9, 2025, China also pushed forward repayment of a separate $2 billion loan by one year, giving Pakistan some relief in its debt obligations.
Pakistan Meets IMF Condition Through Foreign Support
The IMF had asked Pakistan to maintain a minimum of $14 billion in foreign reserves by the fiscal year’s end. Through Beijing’s loan extension and assistance from other lenders, Pakistan achieved that goal. This milestone is essential for ongoing cooperation under the $7 billion IMF bailout programme.
“This brings our reserves in line with the IMF target,” the finance official said, reflecting cautious optimism after months of financial strain.
External Reserves Still Fragile
Despite this progress, Pakistan’s reserves remain vulnerable. According to the State Bank of Pakistan (SBP), reserves dropped by $2.66 billion in the week ending June 20, 2025, falling to $9.06 billion before these inflows.
Pakistan still depends on external financing to maintain stability. Around 92% of the country’s external debt comes from multilateral institutions, bilateral partners like China, and international bond markets.
As the government enforces reforms under IMF supervision, continued financial cooperation from China and other allies is crucial. The $3.4 billion loan rollover highlights China’s ongoing commitment to supporting Pakistan during this critical economic phase.
