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Time of India
28-05-2025
- Business
- Time of India
China assures Pak USD 3.7 billion loan to keep foreign exchange reserves in double digits
China has assured Pakistan of re-lending USD 3.7 billion in commercial loans, denominated in Chinese currency, before the end of June, in a move that will help keep the foreign exchange reserves in double digits, according to a media report on Wednesday. Unlike in the past, when Beijing has given loans in non-Chinese currency too, this time Pakistan's strategic ally has decided not to give loans in the United States currency as part of its drive to decouple the economy from the dollar, the government sources told The Express Tribune newspaper. They said that China gave these assurances during recent meetings, aimed at securing the refinancing of loans maturing between March and June 2025. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like She Was Everyone's Dream Girl In 90's, This Is Her Recently. Investructor Undo Pakistan has already returned a USD 1.3 billion loan of the Industrial and Commercial Bank of China (ICBC) in three tranches between March and April this year, officials said. Subject to some clarifications that the commercial bank has sought from Pakistan, it is expected that the ICBC would re-lend the money in Chinese currency in the next few days, said the government sources. Live Events The ICBC had given the loan two years ago at floating interest rates, which translated to around 7.5 per cent. The central bank's reserves remained around USD 11.4 billion after a USD 1 billion injection by the IMF this month. After the next Chinese refinancing, it may increase to USD 12.7 billion before seeing another dip from the middle of next month, said the sources. A USD 2.1 billion or 15 billion RMB syndicate financing loan by three Chinese commercial banks is maturing in June. Pakistan will pay at least three days ahead of the maturity to make sure that the money is given back before the close of the fiscal year. China would give this money in RMB currency, said the sources. The China Development Bank had given 9 billion RMB, Bank of China 3 billion RMB and ICBC 3 billion RMB. The loan is being extended for a period of three years, said the government sources. However, the interest rate issue was still undecided. Chinese authorities have given two options to Pakistan. It has proposed that Pakistan should either get the loan at a fixed interest rate or at a floating rate but that would not be based on Shanghai Interbank Offered Rate (Shibor), said the sources. The timely refinancing of this loan was critical for Pakistan to keep the reserves in the double digits by the end of June. Under the International Monetary Fund (IMF) programme, Pakistan has committed to increase the reserves close to USD 14 billion in this fiscal year. The Bank of China's USD 300 million loan will also mature next month, which Pakistan has to get refinanced to retain the reserves at their critical minimum levels. This loan too would be refinanced in Chinese currency, said the sources. The move to delink loans from the US dollar is not Pakistan specific rather it is part of the overall Chinese policy to decouple its economy from the US currency. Pakistan remains dependent on Beijing for remaining afloat, the friendly nation that is constantly rolling over the USD 4 billion cash deposits, USD 5.4 billion worth commercial loans and USD 4.3 billion trade financing facility. The recent IMF report stated that Pakistan's total foreign commercial loans as of December 2024 amounted to USD 6.2 billion, including USD 5.4 billion Chinese commercial loans. The rupee-dollar parity has largely remained stable in this fiscal year, albeit some depreciation during the past few days. The rupee-dollar parity closed at Rs 282.2 to a dollar on Tuesday. When contacted, Ministry of Finance spokesman Qumar Abbasi did not give an official version for the story. He had been requested to confirm whether China has agreed to refinance USD 1.3 billion ICBC loan paid in March-April and whether it will be refinanced in RMB currency. He also did not respond to a question whether China also agreed to refinance USD 2.1 billion equivalent CDB-led loan that Pakistan will pay in June. The IMF report underlined that Pakistan has received firm commitments for USD 1 billion financing in the next one year. It added that key bilateral partners remain committed to rolling over existing short-term liabilities in the remaining programme period. But the IMF said that access to external commercial financing is expected to remain limited during the programme period, with a small 'Panda' bond issuance anticipated in the next fiscal year. The IMF sees a gradual return to the Eurobond and global Sukuk market from fiscal year 2027, reflecting a restoration of policy credibility, according to the report.
Express Tribune
28-05-2025
- Business
- Express Tribune
China assures of $3.7b refinancing next month
Foreign exchange reserves have started increasing on the back of recent loans by the AIIB, World Bank, and ADB. The reserves stand over $8.2 billion, and the IMF board is also expected to approve a $700 million tranche this Thursday. photo: file Listen to article China has assured Pakistan of relending $3.7 billion in commercial loans, denominated in Chinese currency, before the end of June, including $2.4 billion that is maturing next month, in a move that will help keep the foreign exchange reserves in double-digits. Unlike in the past, when Beijing has given loans in non-Chinese currency too, this time Pakistan's strategic ally has decided not to give loans in the United States currency as part of its drive to decouple the economy from the dollar; the government sources told The Express Tribune. They said that China gave these assurances during recent meetings, aimed at securing the refinancing of loans maturing between March and June 2025. Pakistan has already returned a $1.3 billion loan of the Industrial and Commercial Bank of China (ICBC) in three tranches between March and April this year, officials said. Subject to some clarifications that the commercial bank has sought from Pakistan, it is expected that the ICBC would relend the money in Chinese currency in the next few days, said the government sources. The ICBC had given the loan two years ago at floating interest rates, which translated to around 7.5%. The central bank's reserves remained around $11.4 billion after a $1 billion injection by the IMF this month. After the next Chinese refinancing, it may increase to $12.7 billion before seeing another dip from the middle of next month, said the sources. A $2.1 billion or 15 billion RMB syndicate financing loan by three Chinese commercial banks is maturing in June. Pakistan will pay at least three days ahead of the maturity to make sure that the money is given back before the close of the fiscal year. China would give this money in RMB currency, said the sources. The China Development Bank had given 9 billion RMB, Bank of China 3 billion RMB and ICBC 3 billion RMB. The loan is being extended for a period of three years, said the government sources. However, the interest rate issue was still undecided. Chinese authorities have given two options to Pakistan. It has proposed that Pakistan should either get the loan at a fixed interest rate or at a floating rate but that would not be based on Shanghai Interbank Offered Rate (Shibor), said the sources. The timely refinancing of this loan was critical for Pakistan to keep the reserves in the double digits by the end of June. Under the International Monetary Fund (IMF) programme, Pakistan has committed to increase the reserves close to $14 billion in this fiscal year. The Bank of China's $300 million loan will also mature next month, which Pakistan has to get refinanced to retain the reserves at their critical minimum levels. This loan too would be refinanced in Chinese currency, said the sources. The move to delink loans from the US dollar is not Pakistan specific rather it is part of the overall Chinese policy to decouple its economy from the US currency. Pakistan remains dependent on Beijing for remaining afloat, the friendly nation that is constantly rolling over the $4 billion cash deposits, $5.4 billion worth commercial loans and $4.3 billion trade financing facility. The recent IMF report stated that Pakistan's total foreign commercial loans as of December 2024 amounted to $6.2 billion, including $5.4 billion Chinese commercial loans. The rupee-dollar parity has largely remained stable in this fiscal year, albeit some depreciation during the past few days. The rupee-dollar parity closed at Rs282.2 to a dollar on Tuesday. When contacted, Ministry of Finance spokesman Qumar Abbasi did not give an official version for the story. He had been requested to confirm whether China has agreed to refinance $1.3 billion ICBC loan paid in March-April and whether it will be refinanced in RMB currency. He also did not respond to a question whether China also agreed to refinance $2.1 billion equivalent CDB-led loan that Pakistan will pay in June. The IMF report underlined that Pakistan has received firm commitments for $1 billion financing in the next one year. It added that key bilateral partners remain committed to rolling over existing short-term liabilities in the remaining programme period. But the IMF said that access to external commercial financing is expected to remain limited during the programme period, with a small "Panda" bond issuance anticipated in the next fiscal year. The IMF sees a gradual return to the Eurobond and global Sukuk market from fiscal year 2027, reflecting a restoration of policy credibility.
South China Morning Post
07-02-2025
- Business
- South China Morning Post
HKMA to launch US$13.7 billion facility to support yuan-settled global trade
The Hong Kong Monetary Authority (HKMA) said it would launch a 100 billion yuan (US$13.7 billion) funding facility at the end of February to support international trade settled in China's currency. To meet growing demand for use of the Chinese currency in trade finance and strengthen Hong Kong's position as the world's premier offshore yuan hub, the HKMA said it would unveil the RMB Trade Financing Liquidity Facility on February 28, according to a statement on Friday. The HKMA said the facility would provide yuan funding to banks for trade finance using the onshore interest rate – the Shanghai Interbank Offered Rate (SHIBOR), which is typically lower than the offshore rate – plus a premium of a quarter of a percentage point. The available tenors are one, three or six months, which are longer than the HKMA's existing yuan liquidity facilities, which cover tenors of up to a week. The facility was expected to provide 'participating banks with access to a stable source of funds at a lower cost, which should make it easier for [companies] to obtain RMB trade finance from banks at lower interest rates', the HKMA said. The facility can be used to provide yuan financing to overseas and local companies. The HKMA would adopt a phased approach to allocating quotas to banks and has invited them to register their interest in the programme, along with their desired quotas. It said it would engage with banks in the next two to three weeks. The use of the yuan for international trade settlement has become more popular as companies seek cost efficiencies and supply chain diversification amid US-China tensions, top financiers have said in recent interviews.
