China has rolled over $3.4 billion in loans, helping Islamabad meet a key International Monetary Fund (IMF) requirement and avoid a foreign exchange crisis, a senior finance ministry official said on Sunday.
According to the source, Beijing has agreed to roll over $2.1 billion that has been sitting in the State Bank of Pakistan’s reserves for the past three years, providing vital support for the country’s dwindling foreign exchange stockpile. Additionally, China has refinanced another $1.3 billion commercial loan that Pakistan had repaid just two months ago, effectively returning those funds to Islamabad’s coffers.
“This brings our reserves in line with the IMF target,” the official said, explaining that the IMF program required Pakistan to maintain foreign exchange reserves above $14 billion by the end of the current fiscal year on June 30.
Beyond the Chinese loans, Pakistan has also secured $1 billion from Middle Eastern commercial banks and $500 million from multilateral sources in recent weeks. Together, these inflows will lift the country’s reserves to around $14 billion, providing a temporary buffer against balance-of-payments pressures.
The loans are critical for Pakistan, which has been grappling with one of its worst economic crises in decades. The country is implementing tough reforms under a $7 billion IMF bailout package, which demands painful fiscal tightening, subsidy cuts, and measures to improve tax collection. Despite political uncertainty and high inflation, Pakistani authorities insist these reforms are stabilizing the economy.
However, analysts warn that such rollovers and stopgap financing offer only temporary relief. Pakistan remains vulnerable to external shocks and will likely need to negotiate a longer-term IMF program to avoid slipping back into crisis.
The government hopes to secure a larger and longer-term IMF deal in the coming months to support structural reforms, improve investor confidence, and address persistent trade and fiscal deficits. For now, though, China’s timely financial backing has helped Islamabad avoid an immediate reserve shortfall and maintain a fragile stability as the fiscal year closes.