LAHORE (Monitoring Desk):Pakistan has repaid a $700 million commercial loan to the China Development Bank this week, temporarily reducing gross official foreign exchange reserves to $15.5 billion, officials said. The repayment comes ahead of the third review under the International Monetary Fund (IMF) Extended Fund Facility and amid decisions on whether to return or seek extensions for bilateral cash deposit loans.
An IMF mission will visit Pakistan from February 25 to March 11, spending three days in Karachi before talks with the federal government in Islamabad from March 2. The mission is expected to review approval of a $1 billion tranche under the EFF, along with over $200 million under a climate facility.
China has so far provided $6.6 billion in commercial loans, $4 billion in cash deposits, and a $4.5 billion credit swap facility, which remain critical amid weak foreign direct investment and shrinking exports. Another $1 billion loan from the China Development Bank is maturing in June, which Islamabad may repay ahead of schedule to secure refinancing before the fiscal year ends.
Pakistan also relies heavily on deposits from the United Arab Emirates and Saudi Arabia. The UAE recently rolled over a $2 billion deposit for only one month, against Pakistan’s expectation of a two-year extension at a lower interest rate. Government officials said discussions are ongoing for a longer-term rollover.
External public debt rose by 6% to $91.8 billion as of June 2025, an increase of $5 billion over the year, according to the Finance Ministry. Multilateral lenders, including the IMF, contributed nearly $4 billion of the rise, while commercial bank borrowing, including a $1 billion loan backed by Asian Development Bank guarantees, added $1.6 billion. Total commercial loans rose to $7.2 billion by the end of the last fiscal year.
Prime Minister Shehbaz Sharif acknowledged that reliance on external financing burdens national self-respect and compromises policy autonomy. Finance Minister Muhammad Aurangzeb said Pakistan’s external financing requirements are fully met and there is no immediate gap.
Internal discussions are ongoing regarding the sustainability of annual rollovers of $12.5 billion in cash deposits from China, Saudi Arabia, and the UAE. Additional short-term relief may come from new financing from Standard Chartered Bank and the Islamic Development Bank, sources said.
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