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last mo.

China to re-lend $3.7 billion to Pakistan in yuan by end-June to boost FX reserves

The yuan financing supports Pakistan’s pledge to shore up reserves under its IMF programme

As India continues to pound Pakistan, Beijing offers Islamabad $3.7 bn lifeline

Overview

  • China has pledged to re-lend $3.7 billion in yuan to Pakistan by end-June to keep its foreign exchange reserves in double digits.
  • Islamabad repaid a $1.3 billion ICBC loan between March and April and expects the bank to reissue those funds in yuan.
  • A $2.1 billion syndicate financing package from China Development Bank, Bank of China and ICBC maturing in June will also be rolled over into yuan.
  • Beijing has offered Pakistan a choice of fixed or floating interest rates for the new loans that will not be linked to the Shanghai Interbank Offered Rate.
  • The yuan refinancing is projected to lift Pakistan’s foreign exchange reserves to about $12.7 billion as it works toward the IMF’s near-$14 billion target.