Pakistan has formally requested China to expedite the refinancing of a $1.3 billion commercial loan, with officials expecting the funds to be disbursed later this month once terms and conditions are finalized, according to sources familiar with the matter.
Pakistani and Chinese authorities are in discussions to complete the refinancing process as quickly as possible, the sources said. Officials at the Finance Ministry expressed hope that the inflow would provide timely support to Pakistan’s foreign exchange reserves.
The refinancing request follows $2.2 billion in external debt repayments made in July, including the repayment of the $1.3 billion Chinese commercial loan, the sources said.
The government also expects the State Bank of Pakistan (SBP) to purchase more than $7 billion from the interbank foreign exchange market during the current fiscal year. The dollars acquired through the market are expected to be used for external debt servicing and to strengthen the country’s foreign exchange reserves, according to the sources.
Separately, the SBP said Pakistan’s total liquid foreign exchange reserves stood at $22.442 billion as of July 24, 2026. Of the total, the central bank held $17.030 billion, while commercial banks held $5.412 billion.
The SBP’s reserves declined by $229 million during the week ended July 24, falling to $17.030 billion from the previous week due to external debt repayments, the central bank said.
The anticipated refinancing from China is expected to offset part of the recent decline in reserves and provide additional external liquidity support as Pakistan continues to meet its debt obligations while maintaining reserve adequacy.