Pakistan Formally Requests China to Fast-Track $1.3 Billion Loan Refinancing
ISLAMABAD, August 4, 2026: Pakistan has formally requested China to expedite the refinancing of a $1.3 billion commercial loan, aiming to strengthen the country’s foreign exchange reserves after making significant external debt repayments last month.
According to sources in the Ministry of Finance, Pakistani and Chinese officials are in active discussions to complete the refinancing process as quickly as possible. Once the remaining terms, conditions, and procedural requirements are finalized, the funds are expected to be transferred to Pakistan during the current month.
The refinancing request comes after Pakistan repaid $2.2 billion in external debt obligations in July, including the settlement of a $1.3 billion Chinese commercial loan. Officials believe the early arrival of the refinancing will provide much-needed support to the country’s foreign exchange reserves and improve external liquidity.
Finance Ministry sources said the government remains optimistic that the funds will be received soon, helping maintain financial stability while meeting upcoming external financing requirements.
Earlier, State Bank of Pakistan Governor Jameel Ahmad stated that Pakistan had repaid $2.2 billion in external debt during July, reducing the country’s annual external debt repayment burden from $26.5 billion to $21.5 billion. He added that around $3.5 billion would be paid as interest during the current fiscal year.
The SBP governor also noted that the government is pursuing a strategy to reduce debt repayment pressure while increasing foreign exchange reserves. As part of this plan, Pakistan expects the rollover of approximately $12 billion in deposits and loans from China and Saudi Arabia.
Officials further said Pakistan has already repaid about $1.4 billion in commercial loans to Chinese banks, and the refinancing is anticipated after a short delay. The government has now formally urged Chinese authorities to complete the process at the earliest.