China to Re-Lend $3.7 Billion to Pakistan in June

In a significant financial development, China has agreed to re-lend $3.7 billion to Pakistan in June 2025, offering crucial support as Islamabad struggles with a balance-of-payments crisis, low foreign reserves, and pressure from the International Monetary Fund (IMF). The financial arrangement comes at a critical juncture, potentially providing Pakistan the breathing space it needs to avoid default and sustain economic operations.

• China to re-lend $3.7 billion to Pakistan in June 2025

• The loan is a rollover of earlier deposits, avoiding fresh borrowing complications

• Part of Pakistan’s effort to secure external financing amid IMF negotiations

• State Bank of Pakistan (SBP) to receive funds directly

• This move will boost foreign exchange reserves temporarily

• Strategic support from China to sustain CPEC and bilateral ties

This re-lending is part of China’s continued financial backing for Pakistan, aimed at:

• Stabilizing the foreign exchange reserves

• Meeting debt obligations

• Maintaining import capability, especially for essential goods and energy

• Strengthening investor confidence temporarily

Pakistan is currently navigating several economic challenges:

• Foreign reserves fell to nearly $4.4 billion (barely enough for 1 month of imports)

• Facing pressure from the IMF to secure external financing assurances

• Debt repayments due in July–September 2025

• Rupee depreciation and inflation hovering around 25%

This Chinese assistance will allow Pakistan to:

• Meet immediate debt obligations

• Import fuel, food, and medicines

• Avoid default signals to global credit agencies

• Negotiate with the IMF and other lenders from a stronger position

China has remained Pakistan’s most reliable financial partner over the years. Here are recent examples:

• In 2022 and 2023, China rolled over $5 billion in deposits

• In 2024, Chinese banks provided commercial loans worth $1.3 billion

• Continued investment under CPEC despite global economic uncertainty

“China’s support is not just economic—it’s strategic,” said a Pakistani Finance Ministry official.

“The re-lending will temporarily stabilize the economy, but Pakistan must reduce its dependency and diversify external finance sources.”

“This is not free money. It's a breathing space—and must be used wisely to fix structural problems.”

• Debt repayments to international creditors

• Fuel and energy imports (especially ahead of summer demand)

• Stabilizing the currency by boosting SBP reserves

• Negotiating leverage for the next IMF tranche

We are grateful to our trusted partner, China. This support shows the strength of our all-weather friendship.”

“We need to invest this wisely, not just plug budget holes.”

Pakistan is currently in talks with the IMF for a new Extended Fund Facility (EFF). One of the IMF’s preconditions is ensuring external financing commitments.

China’s $3.7B rollover serves that goal:

• Strengthens Pakistan’s credibility in IMF negotiations

• Demonstrates bilateral trust amid Western reluctance

• Keeps Pakistan afloat without entirely depending on the IMF

China’s decision to re-lend $3.7 billion to Pakistan offers a short-term financial cushion, but also re-emphasizes the importance of sound fiscal policy and economic reform. As Pakistan navigates its economic recovery, this lifeline may be the difference between stability and deeper crisis—but only if used wisely.