Pakistan Struggles with Recurrent Loan Repayments as Reserves Plummet

Pakistan recently repaid a USD 1 billion loan to China's ICBC, bringing its foreign reserves to a six-month low of USD 10.6 billion. The repayment includes two tranches and heavily impacts Pakistan's economic stability. The government anticipates refinancing but faces further loan maturities soon.

Pakistan has recently made a significant repayment of a USD 1 billion commercial loan to the Industrial and Commercial Bank of China (ICBC), amidst expectations of soon securing refinancing, as reported by local media.

The repayment, done in two equal tranches, has temporarily reduced the country's already limited foreign exchange reserves to a six-month low of USD 10.6 billion, according to reports. Pakistani authorities disclosed that the original loan by ICBC was granted two years ago at a floating interest rate around 7.5 per cent.

In addition to this, another USD 300 million loan tranche by ICBC is due to mature by mid-April, with plans for retirement in the same month underway. As a result, there is an impending further downturn in reserves, with the Finance Ministry optimistic about securing necessary refinancing.

(With inputs from agencies.)