Pakistan to get another loan worth billions from…, it is because…
New Delhi: Pakistan and China have finalized commercial loan agreements worth $3.7 billion this week. This means that China is going to give Pakistan a huge loan. After this loan from China, Pakistan’s foreign exchange reserves will increase to $12.4 billion, which had come down to just $8.9 billion last week due to which Pakistan was facing the threat of bankruptcy.
How much is Pakistan’s foreign exchange?
A Bloomberg report has confirmed, citing sources, that the Industrial and Commercial Bank of China (ICBC) and the Bank of China have signed a $1.6 billion deal on Friday, June 27. This loan is expected to help Pakistan meet its IMF target of ending the fiscal year with gross reserves of $14 billion.
These agreements have come at a time when Pakistan’s foreign exchange reserves have reached a mere $8.9 billion, more than half of which is being repeatedly ‘rolled over’ by China. According to reports, Beijing has kept Pakistan financially alive by continuously advancing cash deposits of $4 billion, commercial loans of $5.4 billion, and trade finance facility of $4.3 billion.
What does Chinese loan mean to Pakistan?
According to the report, on May 19, Pakistan’s Deputy Prime Minister Ishaq Dar, who is also the country’s Foreign Minister, visited Beijing and during this time an agreement was reached between the two countries regarding the loan. According to the report, the loans taken by Pakistan from China have an average floating interest rate of 7.5%. Pakistan’s entire economic strategy now revolves around China. Cash loans from Beijing, unfinished projects under CPEC (China-Pakistan Economic Corridor), and emergency credit lines being continuously taken from Chinese banks have made Pakistan’s economic policy completely dependent on China.
How much is Pakistan’s total debt?
At present, Pakistan’s total debt to China is around $26 billion, which includes cash deposits, commercial loans and export-import financing. China is repeatedly ‘rolling over’ this debt, but this has become a permanent debt spiral rather than a relief. Reports from June 2025 say that Pakistan’s current account deficit is growing, the rupee is unstable, and food and fuel prices are constantly rising. Foreign investment has almost stopped, and domestic industries are dying due to lack of power and raw materials while policymakers have ignored warnings from international agencies. But interest rates are rising, and repayment deadlines are approaching. Pakistan has to pay back about $25-27 billion in the next 12 months, with most of the debt taken from China, Saudi Arabia and the United Arab Emirates (UAE).
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