Govt eyes $3.3bn in foreign loans from Chinese banks

• Loan deals to be finalised till end of June 2025: officials.
• First loan to be syndicated financing of $2bn for three years.
• Second will be of $1.3bn refinancing of ICBC's lending.

ISLAMABAD: Amid ongoing government efforts to stabilise the economic indicator, Pakistan is eyeing $3.3 billion in the form of two foreign loans from Chinese banks within the next few days, The News reported on Tuesday.

"Yes, we are still working closely with the Chinese high-ups to finalise modalities of this expected deal. We are expecting the striking of two different foreign loans from Chinese banks till the end of June 2025," top officials of the government confirmed to the publication.

"A syndicated financing of $2 billion will be made available to Pakistan by a consortium of Chinese banks for three years," they added.

Meanwhile, the second loan of $1.3 billion will be a refinancing of a commercial loan from the Industrial and Commercial Bank of China (ICBC) — which was paid back by Islamabad a few months ago.

It is expected that the foreign exchange reserves held by the State Bank of Pakistan (SBP) will surpass the $14 billion mark if this deal materialises within the outgoing financial year, which ends on June 30.

In rupee terms, the government will be able to generate approximately Rs924 billion ($3.3 billion), so the maturity of the short-term domestic debt would be cleared by the deadline of the first ten days of July 2025.

Pakistan's foreign exchange reserves held by the State Bank of Pakistan (SBP) stood at $11.7 billion by June 13, 2025, and the expected injection of $3.3 billion would help the SBP to jack up the foreign reserves to touch $15 billion, mark.

However, keeping in view outflow requirements, there are strong expectations that the foreign reserves held by the SBP might be standing at over $14.5 billion by the end of June 2025.

This scribe contacted to Ministry of Finance Spokesman Qamar Abbasi, and inquired about the possibility of two commercial loans and whether it would be provided in Chinese currency RMB instead of US dollars. The official spokesman did not share any response till the filing of this story.

In another important but relevant development, when the Strait of Hormuz might witness a blockade owing to intensified war between Iran and Israel, the oil prices have started witnessing a surge in the international market, mainly because of the possible disruption in the route of 20% supply of oil through this sea route.

The oil prices have already gone up to $75-76 per barrel, although they fell slightly on Monday. There is strong apprehension that if war persists and Iran manages to block the route, then the prices might further escalate in the days to come. If the oil prices crossed $85 to $90 per barrel, it will result in surfacing the current account into deficit after remaining surplus in the outgoing fiscal year 2024-25 ending on June 30, 2025.

"The Kingdom of Saudi Arabia has provided $100 million in May 2025 for the provision of oil facility," the Economic Affairs Division (EAD) data shows, but it did not mention clearly whether this amount was used for oil or any other purpose.