In March 2025, Pakistan successfully repaid a $1 billion commercial loan to the Industrial and Commercial Bank of China (ICBC), aiming to maintain financial stability and uphold its debt obligations. The repayment was executed in two equal tranches of $500 million each, temporarily reducing the nation’s foreign exchange reserves to a six-month low of $10.6 billion.

Loan Repayment Details:

  • First Tranche: $500 million paid in the first week of March 2025.​
  • Second Tranche: $500 million paid in the third week of March 2025.​

The ICBC had extended this loan to Pakistan two years prior at a floating interest rate of approximately 7.5%. The State Bank of Pakistan managed the repayments through strategic purchases of dollars from the market and leveraging foreign inflows.

Refinancing Efforts:

The Ministry of Finance is actively engaged in discussions with ICBC to refinance the $1 billion facility. While talks have commenced, specific terms, including interest rates, are yet to be finalized. Pakistan’s financial strategy heavily relies on support from China, which includes:​

  • Rolling over $4 billion in cash deposits.​
  • Maintaining $6.5 billion in commercial loans.​
  • Sustaining a $4.3 billion trade financing facility.​

Upcoming Debt Obligations:

Between April and June 2025, Pakistan faces additional Chinese commercial loan maturities totaling $2.7 billion:​

  • April 2025: A $300 million tranche from ICBC is due.​
  • June 2025: A $2.1 billion syndicated loan from three Chinese banks and a $300 million loan from the Bank of China are set to mature.​

The government intends to refinance these obligations to maintain adequate foreign exchange reserves and ensure financial stability.

International Monetary Fund (IMF) Engagement:

Pakistan and the IMF have reached a staff-level agreement on the completion of the first review of the Extended Fund Facility. Upon approval by the IMF’s Executive Board, this agreement will facilitate the release of a $1 billion tranche. The timing of the board meeting remains uncertain, potentially occurring between May and June 2025. The IMF has identified an external financing gap of over $6 billion, necessitating Pakistan to secure additional funding sources to bridge this shortfall.

Debt Rescheduling Request:

In February 2025, Pakistan requested the Export-Import Bank of China to reschedule $3.4 billion in debt over two years to address the identified external financing gap. The Ministry of Finance has yet to disclose the status of this request.

Pakistan’s proactive approach in managing its debt obligations, including timely repayments and seeking refinancing options, reflects its commitment to maintaining economic stability and fostering investor confidence.