Pakistan secures $1bn loan from two Middle Eastern banks: FinMin Aurangzeb
Business
He confirmed it during an interview at World Economic Forum's annual meeting in Davos
DAVOS (Web Desk) – Finance Minister Muhammad Aurangzeb announced on Tuesday that Pakistan finalised terms for a $1 billion loan from two Middle Eastern banks.
The loans, agreed upon with an interest rate of 6 to 7 percent, include a bilateral agreement and a trade financing arrangement, both with short-term tenures of up to one year.
Aurangzeb confirmed the deal during an interview at the World Economic Forum's annual meeting in Davos.
The funding is part of Pakistan's broader strategy to raise $4 billion from Middle Eastern commercial banks by the next fiscal year, according to State Bank of Pakistan Governor Jameel Ahmad.
Aurangzeb expressed hope about the nation’s financial outlook and revealed plans to engage with credit rating agencies to pursue an upgrade to a single B rating. "Ideally, I would like to see some action on this front before our fiscal year ends in June," he said.
Currently rated in "junk" territory, Pakistan has seen minor improvements this year. Moody's upgraded the country's credit rating to Caa2 in August, citing improved macroeconomic conditions, while Fitch raised its rating to CCC+ in July following an International Monetary Fund (IMF) staff-level agreement.
Pakistan’s financial stabilization efforts are supported by the $7 billion IMF Extended Fund Facility (EFF), secured in September 2024. The first review under the program is set for late February 2025, with Aurangzeb confident about meeting its requirements.
In addition, the government has sought $1 billion from the IMF’s Resilience and Sustainability Trust (RST) to fund climate-related initiatives. Discussions are expected to progress during the upcoming IMF mission. "I’m hopeful we can finalize this within the next six to nine months," Aurangzeb added.
The announcement signals Pakistan's determined approach to navigating its financial challenges and improving its economic standing on the global stage.
