Pakistan has formally requested an additional 10 billion yuan ($1.4 billion) loan from China to address its ongoing external financing needs.
According to media reports, Finance Minister Muhammad Aurangzeb met with China’s Vice Minister of Finance, Liao Min, during the IMF and World Bank annual meetings, urging an increase in the existing Currency Swap Agreement (CSA) limit from 30 billion yuan to 40 billion yuan.
If approved, this expansion would bring the total swap facility with China to approximately $5.7 billion.
Pakistan has already fully utilized the current $4.3 billion trade finance facility under the currency swap arrangement to manage foreign debt obligations. Less than two weeks ago, China extended the existing facility for another three years, allowing Pakistan’s repayment period to stretch until 2027.
This request follows Pakistan’s recent acceptance of a $600 million commercial loan at an 11% interest rate—a costly move that drew distance from the IMF, which clarified that the loan wasn’t linked to the $7 billion bailout package.
The CSA between Pakistan and China, originally established in 2011, aims to bolster bilateral trade, support foreign direct investment, and enhance liquidity. The limit was previously raised to 30 billion yuan in 2021 and matched in Pakistani rupees with flexible maturity periods of up to a year.
In addition to this facility, Pakistan has received $4 billion in SAFE deposits and $4 billion in commercial loans from China, both of which are reflected in Pakistan’s foreign exchange reserves, currently valued at $11 billion.
These reserves remain lower than Pakistan’s debt obligations to China, underscoring the country’s need for sustained financial support.
