China rolled over $3.4 billion in loans to Pakistan last week, which together with other recent commercial and multilateral lending will boost Soth Asian country’s foreign exchange reserves to $14 billion.
Pakistan, an ally of both the United States and China, has been struggling to revive its economy in recent years.
Currently, the South Asian country is working to maintain enough foreign exchange reserves and expand exports, which have stagnated over the past few years. In the absence of enough exports, remittances sent by overseas Pakistan to the tune of $30 billion annually have provided the much-needed cushion.
Meanwhile, Pakistan is working on a trade deal with the United States after President Donald Trump announced a 29% reciprocal tariff on Pakistani imports.
Beijing rolled over $2.1 billion, which has been in Pakistan’s central bank’s reserves for the last three years, and refinanced another $1.3 billion commercial loan, which Islamabad had paid back two months ago.
Another $1 billion from some Middle Eastern commercial banks and $500 million from multilateral financing have also been received, a Pakistani official said.
“This brings our reserves in line with the IMF target,” an official of Pakistan’s finance ministry was quoted by British news agency, Reuters as saying.
The Chinese have helped the country shore up its foreign reserves somewhat. The IMF requires Islamabad to keep at least $14 billion at the end of the current fiscal year on June 30.
Pakistani officials say that the country’s economy has stabilized through ongoing reforms under a $7 billion IMF bailout.
Pakistan has set a GDP growth target of 4.2 percent during the upcoming fiscal year 2025-26.
The country’s economic problems multiplied in the backdrop of long-delayed fiscal reforms, weak governance and political instability that rocked the country with the ouster of former Prime Minister Imran Khan in 2022.
A coalition government that came to power after 2024 elections — deemed as controversial by the majority of Pakistanis — has found it hard to attract major investment inflows.
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Muhammad Luqman is Associate Editor at Views News Now. He writes on wide-ranging issues including economy, South Asia, the Middle East, agriculture, economy and innovation. Luqman has worked some of the leading news organizations and won acclaim for his original and research-based works.
