ISLAMABAD: Pakistan has repaid a $1.4 billion Chinese commercial loan, but Chinese banks have not yet refinanced the amount.
The refinancing is expected to be provided to Islamabad after a few weeks, the report said, citing State Bank of Pakistan (SBP) Governor Jameel Ahmed.
“We have undertaken foreign debt servicing of $2.2 billion in July 2026, including $1.4 billion of Chinese commercial loan and remaining $800 million on account of other loans,” Ahmed said while speaking to reporters outside Parliament House on Wednesday after attending a meeting of the Senate Standing Committee on Finance.
The repayment contributed to a decline in SBP-held foreign exchange reserves, which had climbed to $18.4 billion by July 3, 2026, before heavy repayments of Chinese commercial loans and other debt obligations brought them lower.
The country’s total foreign exchange reserves stood at $22.6 billion on July 17, 2026, comprising $17.2 billion held by the SBP and $5.4 billion held by commercial banks.
The SBP governor said foreign debt servicing had decreased from $26.5 billion in fiscal year 2024-25 to $21.5 billion in the current fiscal year 2026-27, owing to various factors, including declining interest rates.
Of the $21.5 billion, around $3.5 billion will be interest repayments during the current fiscal year, he said.
Ahmed said approximately $12 billion of total debt servicing consisted of deposits held with the SBP, while $3 billion were commercial loans expected to be refinanced. The remaining foreign debt obligations hover around $7 billion.
Of the total $12 billion deposits, $4 billion are from China and $8 billion are from Saudi Arabia. Pakistan will require rollovers of deposits falling due in December 2026 and March 2027.
The SBP governor said Pakistan had repaid $2.2 billion in debt servicing in the first month of the fiscal year, adding that pressure on foreign debt servicing obligations would be lower during the remaining months from August 2026 to June 2027.
Ahmed further said Kuwait’s $250 million outstanding loan dated back to the 1990s.
According to the SBP governor, the central bank’s total purchases from the interbank market stood at $28 billion over the last three years. The SBP purchased around $9 billion in the last financial year to build a buffer against exogenous economic shocks.
Separately, Saudi Arabia has rolled over $5 billion in deposits for three years, helping Islamabad reduce pressure on its external account, Ahmed said.
When asked about Islamabad’s request to the United States for $10 billion in balance-of-payments support, the governor did not reply.
On increased debt servicing requirements projected by the International Monetary Fund for the next fiscal year, 2027-28, he said this would be analysed later.
As far as the current fiscal year is concerned, Pakistan is comfortable with its foreign debt servicing repayments, according to the report. It added that the central bank appeared likely to continue focusing on building foreign exchange reserves to absorb potential shocks, particularly in the event of a spike in international fuel prices.
